Page:Manual of Political Economy.djvu/25

xiv An individual does not increase the capital of the coontry by spending wealth upon his own enjoyments— hence, the man who saves, and not the spendthrift, is the labourer's best friend — This consideration is expressed in too paradoxical a form when it is asserted that a demand for commodities is not a demand for labour — The Science of Political Economy often only affirms tendencies, and therefore the results deduced from its principles do not always come into immediate opera- tion — It is fallacious to suppose that there can be a glut of capital, and that consequently, without the unproductive expenditure oi the rich, the poor could not be adequately employed— Wealth can only perform the functions of capital by being wholly or partially con- sumed—Foregoing principles illustrated by examples— The rapidity with which a country recovers from a devastating war explained — The consequences of raising revenue by loans investigated — The effects of loans and taxation compared, with especial re^rence to India— The distinction between circulating and fixed capital— The former is consumed by a single use, the latter may continue to perform its functions for a long period ; food consumed by labourers is circu- lating capital ; whereas fixed capital consists of machinery, buildings, railroads^ &c. — The conversion of circulating into fixed capital may temporarily injure the labourers, and may in certain cases per- manently injure some classes of labourers pages 17 — 44

Chapter V. On the ProdiLctive Power of the Three Requisites of Production,

Political Economy would embrace a great number of sciences, if it investigated all the causes upon which depend the productiveness of land, labour, and capital. Hence a definition of Political Economy is required in order that some limit may be placed upon the scope of the science — The most fertile land may be unproductive of wealth — The chief causes which determine the productiveness of labour — The fallacy of estimating the productiveness of capital by the profits realised— All questions relating to profits concern the distribution and not the production of wealth —Division of labour makes labour far more productive — This proved by Adam Smith's illustration with regard to pin-making — He thinks that division of labour increases its productiveness for the three following reasons : ist. The dexterity of the workman is increased ; 2nd. Time is saved if the workman does not pass from one employment to another ; 3rd. When industry is divided into special processes, suitable machinery is more likely to be invented and applied — The first of these three causes produces the principal effect— Many writers think that Adam Smith attributes too much importance to the second cause— The application of machinery often enforces a certain division of labour — Mr. Babbage has shown that Adam Smith has not pointed out that labour is economised when divided, since each workman can be solely employed upon the work for which he is best qualified — The demand for a commodity determines the extent to which division of labour can be carried— The combination or cooperation of labour is essential to its efficiency — Mr. Wakefield has classified the cooperation of labour as simple and complex— The first occurs when several workmen combine to do the same thing — ^The second when one industry is assisted by another — Mr. Wakefield explained the mischief of permitting a young colony