OK Economics Econ. Systems Theory Classical Full Graphics


 

 Excerpts from

the Say's "Treatise
"

 

 

BOOK I

OF THE PRODUCTION OF WEALTH.

 

CHAPTER I.

OF WHAT IS TO BE UNDERSTOOD
BY THE TERM, PRODUCTION.

 

[W]hat … is… wealth[?]…. wealth can only exist where there are things possessed of real and intrinsic value. …The value of a specific article … [is equal to what] other persons are willing, …, to give in exchange …The value that mankind attach to objects originates in the use it can make of them. … 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, …

…. 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, …, there is a creation, not of matter, but of utility; and this I call production of wealth. . Exchangeable value, or price, is an index of the recognised utility of a thing, …

 

CHAPTER II

OF THE DIFFERENT KINDS OF INDUSTRY,
AND THE MODE IN WHICH THEY CONCUR IN PRODUCTION.

 

… spontaneous gifts of nature, …air, water, and light, …. Being neither procurable by production, nor destructible by consumption, they come not within the province of political economy.

When … industry is limited to the bare collection of natural products, it is called agricultural industry, ...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 A particular product is rarely the fruit of one branch of industry exclusively  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 …[Physiocrats made]…, the most serious errors. They allowed no industry to be productive, but that which procured the raw materials;

 

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. …The coal or metal may exist in the earth, in a perfect state, but unpossessd of value. The miner extracts them thence, and this operation gives them a value, by fitting them for the use of mankind.  

 

CHAPTER III

OF THE NATURE OF CAPITAL, AND THE MODE IN WHICH IT CONCURS IN THE BUSINESS OF PRODUCTION
.

 

… mere unassisted industry is insufficient to invest things with value. The human agent of industry must, besides, be provided with pre-existing products; without which his agency, however skillful and intelligent, would never be put in motion. These pre-existing requisites are,

    1. The tools and implements ….

    2. The products necessary for the subsistence of the industrious agent…

    3. The raw materials, which are to be converted into finished products …

The value of all these items constitutes what is denominated productive capital. Under this head of productive capital must likewise be classed the value of all erections and improvements upon real or landed property, which increase its annual produce, as well as that of the farming live and dead stock, that operates as machinery in aid of human industry. Another item of productive capital, is money, whenever it is employed to facilitate the interchange …

 

CHAPTER IV

ON NATURAL AGENTS THAT ASSIST IN THE PRODUCTION OF WEALTH, AND SPECIALLY OF LAND.

 

...when a field is ploughed and sown, …, there is a process performed by the soil, the air, the rain, and the sun, wherein mankind bears no part, but which nevertheless concurs in the creation of the new product that will be acquired at the season of harvest. This process I call the productive agency of natural agents ...The productive faculty of capital is often so interwoven with that of natural agents, that it is difficult, or perhaps impossible, to assign, with accuracy, their respective shares in the business of production. …Thus nature is commonly the fellow-labourer of man and his instruments; … has traced the source of that abundance to the division of labour;*62 …; but this circumstance alone is not sufficient to explain a phenomenon, …, if we consider the power of the natural agents that industry and civilization set at work for our advantage.

 

…once the system of nature is discovered, the production resulting from the discovery, is no longer the product of the inventor's industry. … That utility results from the physical action of fire, …From this error Smith has drawn the false conclusion, that all values produced represent pre-exerted human labour …. …. Now facts demonstrate, that values produced are referable to the agency and concurrence of industry, of capital,*64 and of natural agents, … but these three sources can produce value, …. Of natural agents, some are susceptible of appropriation, that is to say of becoming the property of an occupant, … others can not be appropriated, We shall see, by-and-by, how capital, which is subject to a continual wear and consumption in the process of production, is continually replaced by the very operation of production; or rather, how its value, when destroyed under one form, re-appears under another. …

 

CHAPTER V

ON THE MODE IN WHICH INDUSTRY, CAPITAL, AND NATURAL AGENTS UNITE IN PRODUCTION.

 

Whether the thing lent be industry, capital, or land, inasmuch as all three concur in the creation of value, their use also bears value, and is commonly paid for. The price paid for the loan of industry is called wages. The price paid for the loan of capital is called interest. And that paid for the loan of land is called rent. The ownership of land, capital, and industry is sometimes united in the same hands..

 

 CHAPTER VII

OF THE LABOUR OF MANKIND, OF NATURE,
AND OF MACHINERY RESPECTIVELY
.

 

Labour, upon whichever of those operations it be bestowed, is productive, because it concurs in the creation of a product. …Man, …, obliges natural agents, and even the products of his own previous industry, to work in concert with him in the business of production. …all machinery must be regarded, from the simplest to the most complicated instrument, from a common file to the most expensive and complex apparatus. …Their obvious effect is to make less labour requisite for the raising the same quantity of produce, … Whenever a new machine, …. is substituted in the place of human labour …., part of the industrious human agents, whose service is thus ingeniously dispensed with, must needs be thrown out of employ. …. A new machine supplants a portion of human labour, but does not diminish the amount of the product; if it did, it would be absurd to adopt it. …But, if the superior abundance of the product and the inferior charges of its production, lower its exchangeable value, the revenue of the consumers is benefited; for to them every saving of expenditure is so much gain.

Inasmuch as machinery produces that evil, it is clearly objectionable. But there are circumstances that commonly accompany its introduction, and wonderfully reduce the mischiefs, while at the same time they give full play to the benefits of the innovation. …

 

CHAPTER VIII

OF THE ADVANTAGES AND DISADVANTAGES RESULTING FROM DIVISION OF LABOUR, AND OF THE EXTENT TO WHICH IT MAY BE CARRIED
.

 

…the several operations, the combination of which forms but one branch of industry, are not in general undertaken or performed by the same person; for they commonly require different kinds of talent; and the labour requisite to each is enough to take up a man's whole time and attention. Nay, in some instances, a single one of these operations is split again into smaller subdivisions, each of them sufficient for one person's exclusive occupation. The celebrated Adam Smith was the first to point out the immense increase of production, and the superior perfection of products referable to this division of labour…

 

Smith attributes this prodigious difference to three causes:

1. The improved dexterity, corporeal and intellectual, acquirer by frequent repetition of one simple operation. In some fabrics the rapidity with which some of the operations are performed exceeds what the human hand could, by those who had never seen them, be supposed capable of acquiring.

2. The saving of the time which is commonly lost in passing from one species of work to another, and in the change of place, position, and tools. The attention, which is always slowly transferred, has no occasion to transport itself and settle upon a new object.

3. The invention of a great number of machines, which facilitate and abridge labour in all its departments. For the division of labour naturally limits each operation to an extremely simple task, and one that is incessantly repeated; which is precisely what machinery may most easily be made to perform.

 

Thus the knowledge or theory necessary to the advancement of commercial industry for instance, attains a far greater degree of perfection, when different persons engage in the several studies; …

Thus, too, the application of knowledge in the same department of commercial industry will obviously arrive at a higher degree of perfection, when divided amongst the several branches of internal, Mediterranean, East and West Indian, American, wholesale and retail, &c. &c. …divisions of labour cannot be carried to the extreme limit, except in products capable of distant transport and the consequent increase of consumption; or where manufacture is carried on amidst a dense population, offering an extensive local consumption. For the same reason, too, many kinds of work, the products of which are destined to instantaneous consumption, are executed by the same individual, in places where the population is limited. …

 

A man, whose whole life is devoted to the execution of a single operation, will most assuredly acquire the faculty of executing it better and quicker than others; but he will, at the same time, be rendered less fit for every other occupation, corporeal or intellectual; his other faculties will be gradually blunted or extinguished; and the man, as an individual, will degenerate in consequence. To have never done any thing but make the eighteenth part of a pin, is a sorry account for a human being to give of his existence. Nor is it to be imagined that this degeneracy from the dignity of human nature is confined to the labourer, … This division of occupations has given rise to the profession of attorneys, whose sole business it is to appear in the courts of justice instead of the principals, and to follow up the different steps of the process on their behalf. These legal practitioners are, confessedly, seldom deficient in technical skill and ability; yet it is not uncommon to meet with men, even of eminence in this profession, wholly ignorant of the most simple processes of the manufactures … With regard to the labouring class, the incapacity for any other than a single occupation, renders the condition of mere labourers more hard and wearisome, as well as less profitable.

 

CHAPTER IX

OF THE DIFFERENT METHODS OF EMPLOYING COMMERCIAL INDUSTRY, AND THE MODE IN WHICH THEY CONCUR IN PRODUCTION.

 

External commerce …Wholesale commerce …Retail commerce …The commerce of …

The persons engaged in these several branches are all agents of commercial industry, whose agency tends to approximate products to the hands of the ultimate consumer. ……. without examining the reason why oil of olives is worth at Marseilles thirty, and at Paris forty sous per lb., I shall content myself with simply stating, that whoever effects the transport of that article from Marseilles to Paris, thereby increases its value to the amount of ten sous per lb. Nor is it to be supposed, that its intrinsic value has received no accession by the transit. The value has positively augmented. …In fact, the transport of products can not be effected without the concurrence of a variety of means, which have each an intrinsic value of their own, … . . The merchant that exports silks to Germany or to Russia, and sells at Petersburg for 40 cents per yard, stuffs that have cost but 30 cents at Lyons, creates a value of 10 cents per yard.

 

There is a further branch of commerce, called the trade of speculation, which consists in the purchase of goods at one time, to be re-sold in the same place and condition at another time, when they are expected to be dearer. Even this trade is productive; its utility consists in the employment of capital, warehouses, care in the preservation, in short, human industry in the withdrawing from circulation a commodity depressed in value by temporary superabundance, and thereby reduced in price below the charges of production, so as to discourage its production, with the design and purpose of restoring it to circulation when it shall become more scarce, and when its price shall be raised above the natural price, … The evident operation of this kind of trade is, to transport commodities in respect of time, instead of locality. …

 

 

 

 

 

 

 

 

 

 

 

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