 Chapter 9 Part B of the Wealth of Nations Book 4. This is a LibriVox recording. All LibriVox recordings are in the public domain. For more information or to volunteer, please visit LibriVox.org. Recording by Stephen Escalera. The Wealth of Nations by Adam Smith. Book 4, Chapter 9, Part B. Of the agricultural systems, or of those systems of political economy which represent the produce of land as either the sole or the principal source of the revenue and wealth of every country. The capital error of this system, however, seems to lie in its representing the class of artificers, manufacturers, and merchants as altogether barren and unproductive. The following observations may serve to show the impropriety of this representation. First, this class, it is acknowledged, reproduces annually the value of its own annual consumption and continues, at least, the existence of the stock or capital which maintains and employs it. But upon this account alone, the denomination of barren or unproductive should seem to be very improperly applied to it. We should not call a marriage barren or unproductive, though it produced only a son and a daughter, to replace the father and mother, and though it did not increase the number of the human species, but only continued it as it was before. Farmers and country laborers, indeed, over and above the stock which maintains and employs them, reproduce annually a neat produce, a free rent to the landlord. As a marriage which affords three children is certainly more productive than one which affords only two, so the labor of farmers and country laborers is certainly more productive than that of merchants, artificers, and manufacturers. The superior produce of the one class, however, does not render the other barren or unproductive. Secondly, it seems, on this account, altogether improper to consider artificers, manufacturers, and merchants in the same light as menial servants. The labor of menial servants does not continue the existence of the fund which maintains and employs them. Their maintenance and employment is altogether at the expense of their masters, and the work which they perform is not of a nature to repay that expense. That work consists in services which perish generally in the very instant of their performance, and does not fix or realize itself in any vendible commodity, which can replace the value of their wages and maintenance. The labor, on the contrary, of artificers, manufacturers, and merchants, naturally does fix and realize itself in some such vendible commodity. It is upon this account that, in the chapter in which I treat of productive and unproductive labor, I have classed artificers, manufacturers, and merchants among the productive laborers, and menial servants among the barren or unproductive. Thirdly, it seems, upon every supposition improper to say that the labor of artificers, manufacturers, and merchants does not increase the real revenue of the society. Though we should suppose, for example, as it seems to be supposed in this system, that the value of the daily, monthly, and yearly consumption of this class was exactly equal to that of its daily, monthly, and yearly production. Yet it would not from thence follow that its labor added nothing to the real revenue to the real value of the annual produce of the land and labor of the society. An artificer, for example, who, in the first six months after harvest, executes ten pounds worth of work, though he should, in the same time, consume ten pounds worth of corn and other necessaries, yet really adds the value of ten pounds to the annual produce of the land and labor of the society. While he has been consuming a half yearly revenue of ten pounds worth of corn and other necessaries, he has produced an equal value of work, capable of purchasing, either to himself or to some other person, an equal half yearly revenue. The value, therefore, of what has been consumed and produced during these six months, is equal, not to ten, but to twenty pounds. It is possible, indeed, that no more than ten pounds worth of this value may ever have existed at any one moment of time. But if the ten pounds worth of corn and other necessaries which were consumed by the artificer had been consumed by a soldier or by a menial servant, the value of that part of the annual produce which existed at the end of the six months would have been ten pounds less than it actually is in consequence of the labor of the artificer. Though the value of what the artificer produces, therefore, should not, at any one moment of time, be supposed greater than the value he consumes, yet at every moment of time the actual existing value of goods in the market is, in consequence of what he produces, greater than it otherwise would be. When the patrons of this system assert that the consumption of artificers, manufacturers, and merchants is equal to the value of what they produce, they probably mean no more than that their revenue, or the fund destined for their consumption, is equal to it. But if they had expressed themselves more accurately and only asserted that the revenue of this class was equal to the value of what they produced, it might readily have occurred to the reader that what would naturally be saved out of this revenue must necessarily increase, more or less, the real wealth of the society. In order, therefore, to make out something like an argument, it was necessary that they should express themselves as they have done, and this argument, even supposing things actually were as it seems to presume them to be, turns out to be a very inconclusive one. Fourthly, farmers and country laborers can no more augment, without parsimony, the real revenue, the annual produce of the land and labor of their society, than artificers, manufacturers, and merchants. The annual produce of the land and labor of any society can be augmented only in two ways, either first, by some improvement in the productive powers of the useful labor actually maintained within it, or secondly, by some increase in the quantity of that labor. The improvement in the productive powers of useful labor depends, first, upon the improvement in the ability of the workman, and secondly, upon that of the machinery with which he works. But the labor of artificers and manufacturers, as it is capable of being more subdivided, and the labor of each workman reduced to a greater simplicity of operation than that of farmers and country laborers, so it is likewise capable of both these sorts of improvement in a much higher degree. In this respect, therefore, the class of cultivators can have no sort of advantage over that of artificers and manufacturers. The increase in the quantity of useful labor actually employed within any society must depend altogether upon the increase of the capital which employs it, and the increase of that capital, again, must be exactly equal to the amount of the savings from the revenue, either of the particular persons who manage and direct the employment of that capital, or of some other persons who lend it to them. If merchants, artificers, and manufacturers are, as this system seems to suppose, naturally more inclined to parsimony and saving than proprietors and cultivators, they are, so far, more likely to augment the quantity of useful labor employed within their society and consequently to increase its real revenue, the annual produce of its land and labor. Fifthly and lastly, though the revenue of the inhabitants of every country was supposed to consist altogether, as this system seems to suppose, in the quantity of subsistence which their industry could procure to them, yet even upon this supposition the revenue of a trading and manufacturing country must, other things being equal, always be much greater than that of one without trade or manufacturers. By means of trade and manufacturers, a greater quantity of subsistence can be annually imported into a particular country than what its own lands, in the actual state of their cultivation, could afford. The inhabitants of a town, though they frequently possess no lands of their own, yet draw to themselves, by their industry, such a quantity of the rude produce of the lands of other people as supplies them, not only with the materials of their work, but with the fund of their subsistence. What a town always is with regard to the country in its neighborhood, one independent state or country may frequently be with regard to other independent states or countries. It is thus that Holland draws a great part of its subsistence from other countries, live cattle from Holstein and Jutland, and corn from almost all the different countries of Europe. A small quantity of manufactured produce purchases a great quantity of rude produce. A trading and manufacturing country therefore naturally purchases, with a small part of its manufactured produce, a great part of the rude produce of other countries, while on the contrary, a country without trade and manufacturers is generally obliged to purchase, at the expense of a great part of its rude produce, a very small part of the manufactured produce of other countries. The one exports what can subsist and accommodate, but a very few, and imports the subsistence and accommodation of a great number. The other exports the accommodation and subsistence of a great number and imports that of a very few only. The inhabitants of the one must always enjoy a much greater quantity of subsistence than what their own lands, in the actual state of their cultivation, could afford. The inhabitants of the other must always enjoy a much smaller quantity. This system however, with all its imperfections, is perhaps the nearest approximation to the truth that has yet been published upon the subject of political economy, and is upon that account well worth the consideration of every man who wishes to examine with attention the principles of that very important science. Though in representing the labor which is employed upon land as the only productive labor, the notions which it inculcates are perhaps too narrow and confined. Yet in representing the wealth of nations as consisting, not in the unconsumable riches of money, but in the consumable goods annually reproduced by the labor of the society, and in representing perfect liberty as the only effectual expedient for rendering this annual reproduction the greatest possible, its doctrine seems to be in every respect as just as it is generous and liberal. Its followers are very numerous, and as men are fond of paradoxes and of appearing to understand what surpasses the comprehension of ordinary people, the paradox which it maintains concerning the unproductive nature of manufacturing labor has not perhaps contributed a little to increase the number of its admirers. They have for some years past made a pretty considerable sect, distinguished in the French Republic of Letters by the name of the Economist. Their works have certainly been of some service to their country, not only by bringing into general discussion many subjects which had never been well examined before, but by influencing, in some measure, the public administration in favor of agriculture. It has been in consequence of their representations accordingly that the agriculture of France has been delivered from several of the oppressions which it before labored under. The term, during which such a lease can be granted, as will be valid against every future purchaser or proprietor of the land, has been prolonged from nine to twenty-seven years. The ancient provincial restraints upon the transportation of corn from one province of the kingdom to another have been entirely taken away, and the liberty of exporting it to all foreign countries has been established as the common law of the kingdom in all ordinary cases. This sect and their works, which are very numerous and which treat not only of what is properly called political economy or of the nature and causes or the wealth of nations, but of every other branch of the system of civil government, all follow implicitly and without any sensible variation, the doctrine of Mr. Kessner. There is, upon this account, little variety in the greater part of their works. The most distinct and best connected account of this doctrine is to be found in a little book written by Mr. Messier de la Rivière, sometime attendant of Martinique, entitled The Natural and Essential Order of Political Societies. The admiration of this whole sect for their master, who was himself a man of the greatest modesty and simplicity, is not inferior to that of any of the ancient philosophers for the founders of their respective systems. There have been, since the world began, says a very diligent and respectable author, the Marquis de Marrabeau, three great inventions which have principally given stability to political societies independent of many other inventions which have enriched and adorned them. The first is the invention of writing, which alone gives human nature the power of transmitting, without alteration, its laws, its contracts, its annals, and its discoveries. The second is the invention of money, which binds together all the relations between civilized societies. The third is the economical table, the result of the other two, which completes them both by perfecting their object, the great discovery of our age, but of which our posterity will reap the benefit. As the political economy of the nations of modern Europe has been more favorable to manufacturers in foreign trade, the industry of the towns, than to agriculture, the industry of the country, so that of other nations has followed a different plan, and has been more favorable to agriculture than to manufacturers in foreign trade. The policy of China favors agriculture more than all other employments. In China, the condition of a laborer is said to be as much superior to that of an artificer, as in most parts of Europe, that of an artificer is to that of a laborer. In China, the great ambition of every man is to get possession of a little bit of land, either in property or in lease, and leases are there said to be granted upon very moderate terms, and to be sufficiently secured to the lessees. The Chinese have little respect for foreign trade. Your beggarly commerce was the language in which the Mandarin's of Peking used to talk to Mr. Delange, the Russian envoy concerning it. Except with Japan, the Chinese carry on themselves and in their own bottoms little or no foreign trade, and it is only into one or two ports of their kingdom that they even admit the ships of foreign nations. Foreign trade, therefore, is in China, every way confined within a much narrower circle than that to which it would naturally extend itself if more freedom was allowed to it, either in their own ships or in those of foreign nations. Manufacturers, as in a small bulk, they frequently contain a great value, and can upon that account be transported at less expense from one country to another than most parts of rude produce, are, and almost all countries, the principal support of foreign trade. In countries, besides less extensive and less favorably circumstance for inferior commerce than China, they generally require the support of foreign trade. Without an extensive foreign market, they could not well flourish, either in countries so moderately extensive as to afford but a narrow home market, or in countries where the communication between one province and another was so difficult as to render it impossible for the goods of any particular place to enjoy the whole of that home market which the country could afford. The perfection of manufacturing industry, it must be remembered, depends altogether upon the division of labor, and the degree to which the division of labor can be introduced into any manufacturer is necessarily regulated, it has already been shown, by the extent of the market. But the great extent of the empire of China, the vast multitude of its inhabitants, the variety of climate, and consequently of productions in its different provinces, and the easy communication by means of water carriage between the greater part of them, render the home market of that country of so great extent as to be alone sufficient to support very great manufacturers, and to admit a very considerable subdivisions of labor. The home market of China is perhaps an extent, not much inferior to the market of all the different countries of Europe put together. A more extensive foreign trade, however, which to this great home market added the foreign market of all the rest of the world, especially if any considerable part of this trade was carried on in Chinese ships, could scarce fail to increase very much the manufacturers of China, and to improve very much the productive powers of its manufacturing industry. By a more extensive navigation, the Chinese would naturally learn the art of using and constructing themselves all the different machines made use of in other countries, as well as the other improvements of art and industry, which are practiced in all the different parts of the world. Upon their present plan, they have little opportunity of improving themselves by the example of any other nation except that of the Japanese. The policy of ancient Egypt, too, and that of the Gen II government of India, seem to have favored agriculture more than all other employments. Both in ancient Egypt and India, the whole body of the people was divided into different castes or tribes, each of which was confined, from father to son, to a particular employment, or class of employments. The son of a priest was necessarily a priest, the son of a soldier, a soldier, the son of a laborer, a laborer, the son of a weaver, a weaver, the son of a tailor, a tailor, etc. In both countries, the caste of the priests holds the highest rank, and that of the soldiers, the next, and in both countries the caste of the farmers and laborers was superior to the castes of merchants and manufacturers. The government of both countries was particularly attentive to the interest of agriculture. The works constructed by the ancient sovereigns of Egypt for the proper distribution of the waters of the Nile were famous in antiquity, and the ruined remains of some of them are still the admiration of travelers. Those of the same kind which were constructed by the ancient sovereigns of Hindustan for the proper distribution of the waters of the Ganges as well as many other rivers, though they have been less celebrated, seem to have been equally great. Both countries accordingly, though subject occasionally to dearths, have been famous for their great fertility. Though both were extremely populous, yet in years of moderate plenty they were both able to export great quantities of grain to their neighbors. The ancient Egyptians had a superstitious aversion to the sea, and as the gintube religion does not permit its followers to light a fire, nor consequently to dress any victuals upon the water, it, in effect, prohibits them from all distant sea voyages. Both the Egyptians and Indians must have depended almost altogether upon the navigation of other nations for the exportation of their surplus produce. And this dependency, as it must have confined the market, so it must have discouraged the increase of the surplus produce. It must have discouraged, too, the increase of the manufactured produce, more than that of the rude produce. Manufacturers require a much more extensive market than the most important parts of the rude produce of the land. A single shoemaker will make more than 300 pairs of shoes in the year, and his own family will not, perhaps, wear out six pairs. Unless, therefore, he has the custom of at least fifty such families as his own, he cannot dispose of the whole product of his own labor. The most numerous class of artificers will sell them in a large country, make more than one in fifty, or one in a one hundred, of the whole number of families contained in it. But in such large countries, as France and England, the number of people employed in agriculture has, by some authors, been computed at a half, by others at a third, and by no author that I know of, at less than a fifth of the whole inhabitants of the country. But as the produce of the agriculture of both France and England is, the far greater part of it, consumed at home, each person employed in it must, according to these computations, require little more than the custom of one, two, or at most of four such families as his own, in order to dispose of the whole produce of his own labor. Agriculture, therefore, can support itself under the discouragement of a confined market much better than manufacturers. In both ancient Egypt and Indostan, indeed, the confinement of the foreign market was in some measure compensated by the convenience of many inland navigations, which opened, in the most advantageous manner, the whole extent of the home market to every part of the produce of every different district of those countries. The great extent of Indostan, too, rendered the home market of that country very great and sufficient to support a great variety of manufacturers. But the small extent of ancient Egypt, which was never equal to England, must at all times have rendered the home market of that country too narrow for supporting any great variety of manufacturers. Bengal, accordingly, the province of Indostan which commonly exports the greatest quantity of rice, has always been more remarkable for the exportation of a great variety of manufacturers than for that of its grain. Ancient Egypt, on the contrary, though it exported some manufacturers, fine linen in particular, as well as some other goods, was always most distinguished for its great exportation of grain. It was long the granary of the Roman Empire. The sovereigns of China, of ancient Egypt, and of the different kingdoms into which Indostan has at different times been divided, have always derived the whole, or by far the most considerable part of their revenue, from some sort of land tax or land rent. This land tax or land rent, like the tithe in Europe, consisted in a certain proportion, a fifth, it is said, of the produce of the land, which was either delivered in kind or paid in money, according to a certain valuation, in which therefore varied from year to year, according to all the variations of the produce. It was natural, therefore, that the sovereigns of those countries should be particularly attentive to the interests of agriculture, upon the prosperity or declension of which immediately depended the yearly increase or diminution of their own revenue. The policy of the ancient Republics of Greece, and that of Rome, though it honored agriculture more than manufacturers or foreign trade, yet seems rather to have discouraged the latter employments than to have given any direct or intentional encouragement to the former. In several of the ancient states of Greece, foreign trade was prohibited altogether, and in several others, the employments of artificers and manufacturers were considered as hurtful to the strength and agility of the human body, as rendering it incapable of those habits which their military and gymnastic exercises endeavored to form in it, and as thereby disqualifying it, more or less, for undergoing the fatigues and encountering the dangers of war. Such occupations were considered as fit only for slaves, and the free citizens of the states were prohibited from exercising them. Even in those states where no such prohibition took place, as in Rome and Athens, the great body of the people were, in effect, excluded from all the trades which are now commonly exercised by the lower sort of the inhabitants of towns. Such trades were, at Athens and Rome, all occupied by the slaves of the rich, who exercised them for the benefit of their masters, whose wealth, power, and protection made it almost impossible for a poor free man to find a market for his work when it came into competition with that of the slaves of the rich. Slaves, however, are very seldom inventive, and all the most important improvements, either in machinery or in the arrangement and distribution of work which facilitate and abridge labor, have been the discoveries of free men. Should a slave propose any improvement of this kind, his master would be very apt to consider the proposal as the suggestion of laziness, and of a desire to save his own labor at the master's expense. The poor slave, instead of reward, would probably meet with much abuse, perhaps with some punishment. In the manufacturers carried on by slaves, therefore, more labor must generally have been employed to execute the same quantity of work than in those carried on by free men. The work of the farmer must, upon that account, generally have been dearer than that of the latter. The Hungarian mines, it is remarked by Mr. Montesquieu, though not richer, have always been wrought with less expense, and therefore with more profit than the Turkish mines in their neighborhood. The Turkish mines are wrought by slaves, and the arms of those slaves are the only machines which the Turks have ever thought of employing. The Hungarian mines are wrought by free men, who employ a great deal of machinery by which they facilitate and abridge their own labor. From the very little that is known about the price of manufacturers in the times of the Greeks and Romans, it would appear that those of the finer sort were excessively dear. Silk sold for its weight in gold. It was not indeed in those times a European manufacturer, and as it was all brought from the East Indies, the distance of the carriage may in some measure account for the greatness of the price. The price, however, which a lady, it is said, would sometimes pay for a piece of very fine linen, seems to have been equally extravagant, and as linen was always either a European or at farthest an Egyptian manufacturer, this high price can be accounted for only by the great expense of the labor which must have been employed about it, and the expense of this labor again could arise from nothing but the awkwardness of the machinery which is made use of. The price of fine woolens, too, though not quite so extravagant, seems, however, to have been much above that of the present times. Some cloths, we are told by Pliny, dyed in a particular manner, cost a hundred denarii, or three pound, six shillings, eight pence the pound weight. Others, dyed in another manner, cost a thousand denarii the pound weight, or thirty three pounds, six shillings, eight pence. The Roman pound, it must be remembered, contained only twelve of our Averdepoise ounces. This high price, indeed, seems to have been principally owing to the dye. But had not the cloths themselves been much dearer than any which are made in the present times, so very expensive a dye would not probably have been bestowed upon them. The disproportion would have been too great between the value of the accessory and that of the principal. The price mentioned by the same author of some triclinaria, a sort of woolen pillows or cushions made use of to lean upon as they reclined upon their couches at table, passes all credibility. Some of them being said to have cost more than thirty thousand pounds, others more than three hundred thousand pounds. This high price, too, is not said to have arisen from the dye. In the dress of the people of fashion of both sexes, there seems to have been much less variety. It is observed by Mr. Arbuthnot in ancient than in modern times, and the very little variety which we find in that of the ancient statues confirms his observation. He infers from this that their dress must, upon the whole, have been cheaper than ours, but the conclusion does not seem to follow. When the expense of fashionable dress is very great, the variety must be very small, but when, by the improvements in the productive powers of manufacturing, art, and industry, the expense of any one dress comes to be very moderate, the variety will naturally be very great. The rich not being able to distinguish themselves by the expense of any one dress will naturally endeavor to do so by the multitude and variety of their dresses. The greatest and most important branch of the commerce of every nation, it has already been observed, is that which is carried on between the inhabitants of the town and those of the country. The inhabitants of the town draw from the country the rude produce which constitutes both the materials of their work and the fund of their subsistence, and they pay for this rude produce by sending back to the country a certain portion of it manufactured and prepared for immediate use. The trade which is carried on between these two different sets of people, consists ultimately in a certain quantity of rude produce exchanged for a certain quantity of manufactured produce. The dearer the latter, therefore the cheaper the former, and whatever tins in any country to raise the price of manufactured produce, tins to lower that of the rude produce of the land, and thereby to discourage agriculture. The smaller the quantity of manufactured produce, which any given quantity of rude produce, or what comes to the same thing, which the price of any given quantity of rude produce is capable of purchasing, the smaller the exchangeable value of that given quantity of rude produce. The smaller the encouragement which either the landlord has to increase its quantity by improving, or the farmer by cultivating the land. Whatever, besides, tins to diminish in any country the number of artificers and manufacturers, tins to diminish the home market, the most important of all markets, for the rude produce of the land, and thereby still further to discourage agriculture. Those systems, therefore, which preferring agriculture to all other employments in order to promote it, impose restraints upon manufacturers in foreign trade act contrary to the very end which they propose, and indirectly discourage that very species of industry which they mean to promote. They are so far perhaps more inconsistent than even the mercantile system. That system, by encouraging manufacturers in foreign trade more than agriculture, turns a certain portion of the capital of the society from supporting a more advantageous to support a less advantageous species of industry. But still it really, and in the end, encourages that species of industry which it means to promote. Those agricultural systems on the contrary, really, and in the end, discourage their own favorite species of industry. It is thus that every system which endeavors either by extraordinary encouragements to draw towards a particular species of industry a greater share of the capital of the society than what would naturally go to it, or by extraordinary restraints to force from a particular species of industry some share of the capital which would otherwise be employed in it, is in reality subversive to the great purpose which it means to promote. It retards instead of accelerating the progress of the society towards real wealth and greatness, and diminishes instead of increasing the real value of the annual produce of its land and labor. All systems, either of preference or of restraint therefore, being thus completely taken away, the obvious and simple system of natural liberty establishes itself of its own accord. Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other man or order of men. The sovereign is completely discharged from a duty in the attempting to perform which he must always be exposed to innumerable delusions and for the proper performance of which no human wisdom or knowledge could ever be sufficient, the duty of superintending the industry of private people and of directing it towards the employment most suitable to the interests of the society. According to the system of natural liberty, the sovereign has only three duties to attend to. Three duties of great importance indeed, but plain and intelligible to common understandings. First, the duty of protecting the society from the violence and invasion of other independent societies. Secondly, the duty of protecting, as far as possible, every member of the society from the injustice or oppression of every other member of it or the duty of establishing an exact administration of justice. And thirdly, the duty of erecting and maintaining certain public works and certain public institutions which it can never be for the interest of any individual or small number of individuals to erect and maintain, because the profit could never repay the expense to any individual or small number of individuals, though it may frequently do much more than repay it to a great society. The proper performance of those several duties of the sovereign necessarily supposes a certain expense, and this expense again necessarily requires a certain revenue to support it. In the following book, therefore, I shall endeavor to explain, first, what are the necessary expenses of the sovereign or commonwealth, and which of those expenses ought to be defrayed by the general contribution of the whole society, and which of them, by that of some particular part only, or of some particular members of the society. Secondly, what are the different methods in which the whole society may be made to contribute towards defraying the expenses incumbent on the whole society, and what are the principal advantages and inconveniences of each of those methods. And thirdly, what are the reasons and causes which have induced almost all modern governments to mortgage some part of this revenue or to contract debts, and what have been the effects of those debts upon the real wealth, the annual produce of the land and labor of the society. The following book, therefore, will naturally be divided into three chapters. End of Book 4, Chapter 9, Part B. End of Book 4.