# Manual of Political Economy/Book 1/Chapter 1

POLITICAL ECONOMY.
BOOK I.
PRODUCTION OF WEALTH.
CHAPTER I.
INTRODUCTORY REMARKS.
Difficulty of the first elements of political economy.ALL who have studied an exact science must have experienced the formidable difficulties which elementary chapters invariably present. The young mathematician may well be staggered at the discussions usually annexed to the enunciations of the laws of motion; the axioms in his Euclid, which he is told to believe are self-evident propositions, offer philosophic questions of such complexity, that they continue to form an arena upon which the subtlest intellects contend.
A definition of political economy, and an inquiry into the method of investigation that ought to be pursued in this science, involve considerations which are sure to perplex the beginner; but the young mathematician need not be driven away from his Euclid because philosophy has not decided whether axioms are intuitive truths, or truths learnt from experience; in a similar way, the student in political economy ought not to have his faith shaken in the truths of this science, because he has learnt beforehand that political economists still dispute upon questions of philosophic method.
We ask such a student to accompany us with an unbiassed mind; we will promise to lay before him truths of great interest and great importance; we will endeavour to render them intelligible, and when such a body of truths has been accumulated in the student's mind, he will be in a position to understand the exact nature and scope of the science to which they belong.
Prejudices against political economy.Although it is not advisable in this place to attempt a precise definition of political economy, yet it is necessary to give a general idea of the class of phenomena which ​this science investigates; it is all the more important to do this, because the vagueness of popular conceptions has generated a vast amount of prejudice towards political economy. Hardhearted and selfish are the stereotyped epithets applied to this science. Ill-defined antipathy is sure not to rest long suspended upon a mere abstract idea; it seeks some concrete object, and therefore the epithets applied to the science are speedily transferred to those who study it, and a political economist exists vaguely in the haze of popular ignorance as a hardhearted, selfish being, who wishes to see everyone rich, but who has no sympathy with those higher qualities which ennoble the character of man. The error of this ignorant prejudice will be abundantly exposed in these pages; but we will make a few preliminary remarks upon it, in order to convince the student that the political economist is not the harsh being generally portrayed, but that he possesses that information which tells him how to improve the lot of his fellow-men. He may therefore be the most useful of all philanthropists; because a mere desire to do good without any principles of guidance is ever liable to lead to futile and misdirected effort.
Political economy is primarily concerned with wealth,Political economy is concerned with those principles which regulate the production, the distribution, and the exchange of wealth.
The first great work on political economy was called by Adam Smith 'The Wealth of Nations;' but political economy is concerned alike with individual and national wealth. Those who share the popular error above alluded to make this inquiry, Has a nation no other mission to fulfil than to become rich? and should wealth be to the individual the one absorbing aim of life? But political economy never even gives colour to the suspicion that the creation and accumulation of wealth ought to be the great object either of a nation's or of an individual's existence. The springs of life's action are numerous; society is held together by a vast aggregation of motives and sympathies. Wealth is necessary to man's existence; a great portion of human exertion is stimulated by the necessity to labour, in order to procure the commodities which maintain life. When, therefore, we endeavour to consider the phenomena connected with the production ​but does not ignore other motives than the desire for wealth.and distribution of wealth, we do not wish, in a feeling of opposition, to ignore the other phenomena of man's social existence; we isolate this class of phenomena, because the necessities of scientific investigation demand it. Every social question, either directly or indirectly, involves some considerations of wealth, and therefore has an aspect from which it must be considered by political economy. Thus, when it was proposed to extend to the whole nation the system of compulsory education, introduced by the Factory Acts, political economy pointed out how production in this country, and how the wages of the labouring classes, would be affected, by compelling every child under thirteen years of age, who might be employed in any kind of labour, to attend school a fixed number of hours per week. This was an aspect of the question which it was necessary to consider, but even if the political economist had proved that the production of commodities would be rendered more expensive, he might have been the first to admit that such a loss of national wealth would be abundantly compensated by the increased intelligence of the labouring population.
Numerous other examples might be given which would still further prove the complete fallacy of the accusation which is so constantly brought against political economy, that it is a science which encourages selfishness and degrades the best feelings of human nature. If a political economist considers that the only aim and end of life is the accumulation of wealth, then the individual ought to be blamed, and not the science which he studies. Political economy, if kept within its proper limits, does not provide a code of social ethics which will enable us to decide what is right or wrong, and what is just or unjust It is the business of political economy to explain the effect which any circumstance, such as the imposition of a tax, or the enforcement of a particular land-tenure, will exert upon the production, the distribution, and the exchange of wealth; and it is therefore manifest that political economy cannot take account of various other consequences which may be independent of any considerations concerning wealth. Thus, to revert to our original illustration, the principles of political economy ​enable us to ascertain in what manner the wages of labourers and the production of wealth are affected by a compulsory system of national education. Hence the department of this question which belongs to political economy is, as it were, separated from those other departments of the question which investigate whether or not the morality and the social happiness of the people are increased by a system of national education. It is therefore a fundamental error to suppose that political economy ever asserts that the higher motives which actuate human beings ought to be discarded in favour of wealth. Some writers on this science when discussing social questions may consider only that part of a subject with which political economy is concerned, and thus the error may be committed of drawing general conclusions from an incomplete investigation. Hence political economists have sometimes appeared to be harsh and narrow-minded, but it is as idle upon these grounds to accuse political economy of being selfish and hardhearted, as it would be to blame geology because an injudicious and enthusiastic geologist ignored and despised other branches of physical science.
It must moreover be borne in mind that although sentimental people may profess to sneer at wealth as one of the idle vanities of this world, yet there can be no doubt that, even in England, the great besetting evil of the nation is the poverty of the humbler classes, and that these people cannot make any great social advance until a decided improvement has taken place in their material condition.
Meaning of the word 'wealth.'We have described political economy as a science which is concerned with the production, the distribution, and the exchange of wealth. But the meaning of wealth, though a word of every-day use, will not probably be adequately understood without some elucidation. Wealth may be defined to consist of every commodity which has an exchange value.
Exchange value.The necessity of the limitations introduced into this definition may be readily shown. The air we breathe is of course not only a want, but a necessity of life; yet it cannot be regarded as wealth, because it can be obtained without labour and its supply is unlimited, ​and it therefore has no exchange value. Water very generally can be obtained in an unlimited quantity, and therefore it is not wealth; but the population of a large town would soon absorb all the water which nature spontaneously provides, and therefore water must be supplied by artificial means It then at once possesses an exchange value, and is justly considered to be wealth. Wealth, therefore, is not determined by the nature and quality of a commodity, but rather by the circumstances in which that commodity may be placed. A gallon of the water which flows from the springs at Amwell is not, there, wealth; it would be as valueless to sell as a cubic foot of air, because, there, a supply of water can be as easily obtained as a supply of air; but that same water conveyed a few miles, to the metropolis, produces the large annual revenues of the New River Company.
The character of wealth may be also given to a commodity by the shifting caprice, or by the changing wants of man. It thus becomes evident that exchange value is the characteristic which stamps a commodity with the attribute of wealth.
Various amounts of wealth in different ages and countries.The most striking variations in wealth are exhibited by the same nation in different ages, and by different nations in the same age. There was a time when England was as poor as any country which is now consigned to the wandering savage, and yet she possessed then those same natural resources which now so materially contribute not only to form but to sustain her present wealth. The richest seams of coal were unworked, but in those remote times her population was in a condition in which they could have no demand for coal, and therefore this article had no exchange value; and that commodity which is now so valuable, could not then be legitimately classed as wealth. Hence it is manifest that the social condition of a nation and the state of its civilisation determine to what extent natural resources may be classed as wealth.
Each stage through which progressive nations have advanced from barbarism to civilisation is preserved at the present time in some parts of the globe. The savage still exists who lives by hunting and fishing; the wandering Arabs are true types of the ancient nomad tribes whose flocks and herds were grazed on natural ​pastures without the aid of the large supply of food which would be yielded even to the rudest agriculture. The village communities of the East remain instructive examples of the patriarchal type of life; the stereotyped condition of China exhibits the features of a remote civilisation. These great differences in wealth are partly due to physical causes, but they mainly depend upon social circumstances, and as far as they do so, form the appropriate topics of political economy. The mind of an Englishman so habitually contemplates progress, that it is difficult to keep in view how large a portion of the habitable globe is in an absolutely stationary condition. It is the duty of the political economist to explain not only the conditions which determine progress in national wealth, but also the causes which tend to make the material state of a country either stationary or retrogressive.
Erroneous view of wealth.It is even at the present day important to direct careful attention to an erroneous conception of wealth, which was universal until the appearance of Adam Smith's great work in 1775. The error when once exposed may appear incapable of misleading a child; yet no error was ever more tenaciously clung to. The mercantile system.It not only corrupted speculative science, but it infected the whole commercial policy of every European nation. These errors are associated with the policy which has received the name of the mercantile system. The essence of the mercantile system was to identify wealth with money. Now the use of money is one of the first signs which marks a nation's progress from barbarism towards civilisation. Societies even comparatively rude must be impressed with the necessity of adopting some medium of exchange. This will be readily understood by a cursory glance at the general functions which money fulfils. In the first place, money provides a measure by which to record the value of each commodity. If, for instance, it is known that a sack of wheat is worth twenty shillings, the value of the sack of wheat, compared with any other article, can be at once ascertained when the price of this last article is known. Money, moreover, is not only a universal measure of value, but is also a universal medium of exchange. A man may possess a store of wheat which ​he requires to exchange for various other commodities; money provides him with the machinery by which this can be readily effected. The wheat has simply to be sold for so much money, and with this money a certain amount of the other commodities required can be purchased. But if the use of money did not provide a general medium of exchange, the whole transaction must be conducted by barter; thus, if the individual possessing the wheat required a coat, he would have to discover some one who was willing to exchange the coat he wanted for wheat. Every transaction would under these circumstances be conducted by barter. Commerce thus impeded could never develop, and society never advance beyond its primitive rudeness. But these important functions which money performs, engendered in men's minds the fallacies of the mercantile system. For the value of every commodity being estimated in money, and every commodity also when bought or sold being exchanged for money, men soon began to mistake the symbol for the reality, and nothing was regarded as wealth except money. A nation consequently tested the utility of its commercial transactions with other nations, by ascertaining whether the commerce caused money to flow into the country. The whole commercial policy of a nation was framed with a specific object of encouraging the greatest possible accumulation of the precious metals. No one would now profess adherence to the errors of the mercantile system, but we shall have abundant opportunities of showing that they are still the secret prompters of many a wide-spread fallacy. The consequences of the mercantile system will be further discussed in those chapters which treat of money.
These general remarks upon wealth will enable us at once to proceed to the consideration of the production of wealth, the first great division of political economy.