A Treatise on Political Economy
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A Treatise on Political Economy

Gary Hull, Gary Hull

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A Treatise on Political Economy

Gary Hull, Gary Hull

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Jean-Baptiste Say (1767-1832) has been described as a revolutionary, an author of scholarly books and popular tracts, a social philosopher, a successful entrepreneur-a remarkable Renaissance man. He is best known as author of the law of markets, known as Say's law, and as the first to coin the term "entrepreneur." Say's concern with the average interested citizen and his zeal for economic education for the masses is most apparent in his classic work, A Treatise on Political Economy.

Readers will see that Say is without doubt a luminary of classical economics. He single-handedly revived the study of political economy from its decline and kept it alive during a difficult period of opposition to liberal ideas. Say had a missionary belief that society will be best served if the principles of political economy are widely disseminated and understood by the citizenry. His organization of the Treatise's subject matter-production, distribution, and consumption of wealth-continues to guide authors of economic textbooks to this day. His treatment of the role of the entrepreneur as a contributor to production different from that of either the manager or the capitalist was the most advanced of his times.

In their new introduction, Quddus and Rashid note that present-day readers of this volume will benefit from the remarkable freshness of Say's ideas. The longevity of this volume proves that good ideas can successfully withstand the test of time. The role played by the Treatise in spreading liberal economic ideas and especially laissez-faire and free trade in France, the rest of Europe, and in the newly independent United States must also be appreciated. One suspects Say would have liked nothing better than to have his Treatise attract entrepreneurs, managers, and other non-specialist readers to economics. Given the emphasis on capitalism, free markets and unrestricted global trade republication of this great classic could not be more timely. Political economists, social philosophers, and those in business fields will find it indispensable reading.

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Chapter I Of What is to be Understood by the Term, Production.

IF we take the pains to inquire what that is, which mankind in a social state of existence denominate wealth, we shall find the term employed to designate an indefinite quantity of objects bearing inherent value, as of land, of metal, of coin, of grain, of stuffs, of commodities of every description. When they further extend its signification to landed securities, bills, notes of hand, and the like, it is evidently because they contain obligations to deliver things possessed of inherent value. In point of fact, wealth can only exist where there are things possessed of real and intrinsic value.
Wealth is proportionate to the quantum of that value; great, when the aggregate of component value is great; small, when that aggregate is small.
The value of a specific article is always vague and arbitrary, so long as it remains unacknowledged. Its owner is not a jot the richer, by setting a higher ratio upon it in his own estimation. But the moment that other persons are willing, for the purpose of obtaining it, to give in exchange a certain quantity of other articles, likewise bearing value, the one may then be said to be worth, or to be of equal value with, the other.
The quantity of money, which is readily parted with to obtain a thing, is called its price. Current price, at a given time and place, is that price which the owner is sure of obtaining for a thing, if he is inclined to part with it.*
The knowledge of the real nature of wealth, thus defined, of the difficulties that must be surmounted in its attainment, of the course and order of its distribution amongst the members of society, of the uses to which it may be applied, and, further, of the consequences resulting respectively from these several circumstances, constitutes that branch of science now entitled Political Economy.
The value that mankind attach to objects originates in the use it can make of them. Some afford sustenance; others serve for clothing; some defend them from the inclemencies of the season, as houses; others gratify their taste, or, at all events, their vanity, both of which are species of wants: of this class are all mere ornaments and decorations. It is universally true, that, when men attribute value to any thing, it is in consideration of its useful properties; what is good for nothing they set no price upon.* To this inherent fitness or capability of certain things to satisfy the various wants of mankind, I shall take leave to affix the name of utility. And I will go on to say, that, to create objects which have any kind of utility, is to create wealth; for the utility of things is the ground-work of their value, and their value constitutes wealth.
Objects, however, cannot be created by human means; nor is the mass of matter, of which this globe consists, capable of increase or diminution. All that man can do is, to re-produce existing materials under another form, which may give them an utility they did not before possess, or merely enlarge one they may have before presented. So that, in fact, there is a creation, not of matter, but of utility; and this I call production of wealth.
In this sense, then, the word production must be understood in political economy, and throughout the whole course of the present work. Production is the creation, not of matter, but of utility. It is not to be estimated by the length, the bulk, or the weight of the product, but by the utility it presents.
Although price is the measure of the value of things, and their value the measure of their utility, it would be absurd to draw the inference, that, by forcibly raising their price, their utility can be augmented. Exchangeable value, or price, is an index of the recognised utility of a thing, so long only as human dealings are exempt from every influence but that of the identical utility: in like manner as a barometer denotes the weight of the atmosphere, only while the mercury is submitted to the exclusive action of atmospheric gravity.
In fact, when one man sells any product to another, he sells him the utility vested in that product; the buyer buys it only for the sake of its utility, of the use he can make of it If, by any cause whatever, the buyer is obliged to pay more than the value to himself of that utility, he pays for value that has no existence, and consequently which he does not receive.*
This is precisely the case, when authority grants to a particular class of merchants the exclusive privilege of carrying on a certain branch of trade, the India trade for instance; the price of Indian imports is thereby raised, without any accession to their, utility or intrinsic value. This excess of price is nothing more or less than so much money transferred from the pockets of the consumers into those of the privileged traders, whereby the latter are enriched exactly as much as the former are unnecessarily impoverished. In like manner, when a government imposes on wine a tax, which raises to 15 cents the bottle what would otherwise be sold for 10 cents -, what does it else, but transfer 5 cents per bottle from the hands of the producers or the consumers of wine to those of the tax-gatherer? The particular commodity is here only the means resorted to for getting at the tax-payer with more or less convenience; and its current value is composed of two ingredients, viz. 1. Its real value originating in its utility: 2. The value of the fax that the government thinks fit to exact, for permitting its manufacture, transport, or consumption.
Wherefore, there is no actual production of wealth, without a creation or augmentation of utility. Let us see in what manner this utility is to be produced.

*The numerous and difficult points arising out of the confusion of positive and relative value are discussed in different parts of this work; particularly in the leading chapters of Book IL Not to perplex the attention of the reader, I confine myself here to so much as is absolutely necessary to comprehend the phenomenon of the production of wealth.
*It would be out of place here to examine, whether or no the value mankind attach to a thing be always proportionate to its actual utility. The accuracy of the estimate must depend upon the comparative judgment, intelligence, habits, and prejudices of those who make it. True morality, and the clear perception of their real interests, lead mankind to the just appreciation of benefits. Political economy takes this appreciation as it finds it—as one of the data of its reasonings; leaving to the moralist and the practical man, the several duties of enlightening and of guiding their fellow-creatures, as well in this, as in other particulars of human conduct.
*This position will hereafter be further illustrated. For the present it is enough to know, that, whatever be the state of society, current prices approximate to the real value of things, in proportion to the liberty of production and mutual dealing.
It will be shown in Book III. of this work, what proportion of the tax is paid by the producer, and what by the consumer.

Chapter II Of The Different Kinds of Industry, and The Mode in which They Concur in Production.

SOME items of human consumption are the spontaneous gifts of nature, and require no exertion of man for their production; as air, water, and light, under certain circumstances. These are destitute of exchangeable value; because the want of them is never felt, others being equally provided with them as ourselves. Being neither procurable by production, nor destructible by consumption, they come not within the province of political economy.
But there are abundance of others equally indispensable to our existence and to our happiness, which man would never enjoy at all, did not his industry awaken, assist, or complete the operations of aature. Such are most of the articles which serve for his food, raiment and lodging.
When that industry is limited to the bare collection of natural products, it is called agricultural industry, or simply agriculture.
When it is employed in severing, compounding, or fashioning the products of nature, so as to fit them to the satisfaction of our various wants, it is called manufacturing industry.*
When it is employed in placing within our reach objects of want which would otherwise be beyond reach, it is called commercial industry, or simply commerce.
It is solely by means of industry that mankind can be furnished, in any degree of abundance, with actual necessaries, and with that variety or other objects, the use of which, though not altogether indispensable, yet marks the distinction between a civilized community and a tribe of savages. Nature, left entirely to itself, would provide a very scanty subsistence to a small number of human beings. Fertile but desert tracts have been found inadequate to the bare nourishment of a few wretches, cast upon them by the chances of shipwreck: while the presence of industry often exhibits the spectacle of a dense population plentifully supplied upon the most ungrateful soil.
The term products is applied to things that industry furnishes to mankind.
A particular product is rarely the fruit of one branch of industry exclusively. A table is a joint product of agricultural industry, which has felled the tree whereof it is made, and of manufacturing industry, which has given it form. Europe is indebted for its coffee to the agricultural industry, which has planted and cultivated the bean in Arabia or elsewhere, and to the commercial industry, which hands it over to the consumer.
These three branches of industry, which may at pleasure be again infinitely subdivided, are uniform in their mode of contributing to the act of production. They all either confer an utility on a substance that possessed none before, or increase one which it already possessed. The husbandman who sows a grain of wheat that yields twenty-fold, does not gain this product from nothing: he avails himself of a powerful agent; that is to say, of Nature, and merely directs an operation, whereby different substances previously scattered throughout the elements of earth, air, and water, are converted into the form of grains of wheat.
Gall-nuts, sulphate of iron, and gum-arabic, are substances existing separately in nature. The joint industry of the merchant and manufacturer brings them together, and from their compound derives the black liquid, applied to the transmission of useful science. This joint operation of the merchant and manufacturer is analogous to that of the husbandman, who chooses his object and effects its attainment by precisely the same kind of means as the other two.
No human being has the faculty of originally creating matter, which is more than nature itself can do. But any one may avail himself of the agents offered him by nature, to invest matter with utility. In fact, industry is nothing more or less than the human employment of natural agents; the most perfect product of labour, the one that derives nearly its whole value from its workmanship, is. probably the result of the action of steel, a natural product upon some substance or other, likewise a natural product.*
Through ignorance of this principle, the economists of the 18th century, though many enlightened writers were to be reckoned amongst them, were betrayed into the most serious errors. They allowed no industry to be productive, but that which procured the raw materials; as the industry of the husbandman, the fisherman and the miner; not adverting to the distinction, that wealth consists, not in matter, but in the value of matter; because matter without value is no item of wealth; otherwise water, flint-stones, and dust of the roads, would be wealth. Wherefore, if the value of matter constitutes wealth, wealth is to be created by the annexation of value. Practically, the man who has in his warehouse a quintal of wool worked up into fine cloths, is richer than one who has the same quantity of wool in packs.
To this position the economists replied, that the additional value communicated to a product by manufacture, was no more than equivalent to the value consumed by the manufacturer during the process; for, said they, the competition of manufactures prevents their ever raising the price beyond the bare amount of their own expenditure and consumption; wherefore their labour adds nothing to the total wealth of the community, because their wants on the one side destroy as much as their industry produces on the other.
But it should have been previously demonstrated by those who made use of this argument, that the value, consumed by mechanics and artizans, must of necessity barely equal the value produced by them, which is not the fact; for it is unquestionable, that more savings are made, and more capital accumulated from the profits of trade and manufacture, than from those of agriculture.(1)
Besides, even admitting that the profits of manufacturing industry are consumed in the satisfaction of the necessary wants of the manufacturers and their families, that circumstance does not prevent them being positive acquisitions of wealth. For unless they were so, they could not satisfy their wants: the profits of the land-owner and agriculturist are allowed to be items of positive wealth; yet they are equally consumed in the maintenance of those classes.
Commercial, in like manner as manufacturing industry, concurs in production, by augmenting the value of a product by its transport from one place “to another. A quintal of Brazil cotton has acquired greater utility, and therefore larger value, by the time it reaches a Warehouse in Europe, than it possessed in one at Pernambuco. The transport is a modification that the trader gives to the commodity, whereby he adapts to our use what was not before available; which modification is equally useful, complex and uncertain in the result, as any it derives from the other two branches of industry. He avails himself of the natural properties of the timber and the metals used in the construction of his ships, of the hemp whereof his rigging is composed, of the wind that fills his sails, of all the natural agents brought to concur in his purpose, with precisely the same view and the same result, and in the same manner too, as the agriculturist avails himself of the earth, the rain, and the atmosphere.*
Thus, when Raynal says of commerce, as contrasted with agriculture and the arts, that “it produces nothing of itself,” he shows himself to have had no just conception of the phenomenon of production. In this instance Raynal has fallen into the same error with regard to commerce, as the economists made respecting both commerce and manufacture. They pronounced agriculture to be the sole channel of production; Raynal refers production to the two channels of agriculture and manufacture: his position is nearer the truth than the other, but still is erroneous.
Condillac also is confused in his endeavour to explain the mode in which commerce produces. He pretends that, because all commodities cost to the seller less than the buyer, they derive an increase - of value from the mere act of transfer from one hand to another. But this is not so; for, since a sale is nothing else but are act of barter, in which one kind of goods, silver for example, is received in lieu of another kind of goods, the loss which either of the parties dealing should sustain on one article would be equivalent to the profit he would make on the other, and there would be to the community no production of value whatsoever.* When Spanish wine is bought at raris, equal value is really given for equal value: the silver paid, and the wine received, are worth one the other; but the wine had not the same value before its export from Alicant: its value has really increased in the hands of the trader, by the circumstance of transport, and not by the circumstance, or at the moment, of exchange. The seller does not play the rogue, nor the buyer the fool; and Condillac has no grounds for his position, that “if men always exchanged equal value for equal value, there would be no profit to be made by the traders.”*
In some particular cases the two other branches of industry produce in a manner analogous to commerce, viz. by giving a value to things to which they a...

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Citation styles for A Treatise on Political Economy
APA 6 Citation
Hull, G. (2017). A Treatise on Political Economy (1st ed.). Taylor and Francis. Retrieved from https://www.perlego.com/book/1554881/a-treatise-on-political-economy-pdf (Original work published 2017)
Chicago Citation
Hull, Gary. (2017) 2017. A Treatise on Political Economy. 1st ed. Taylor and Francis. https://www.perlego.com/book/1554881/a-treatise-on-political-economy-pdf.
Harvard Citation
Hull, G. (2017) A Treatise on Political Economy. 1st edn. Taylor and Francis. Available at: https://www.perlego.com/book/1554881/a-treatise-on-political-economy-pdf (Accessed: 14 October 2022).
MLA 7 Citation
Hull, Gary. A Treatise on Political Economy. 1st ed. Taylor and Francis, 2017. Web. 14 Oct. 2022.