HUNT'S

MERCHANTS' MAGAZINE

AND

COMMERCIAL REVIEW.

MARCH, 1857.

Art. I.-POLITICAL ECONOMY.

NUMBER L

POLITICAL ECONOMY is the science of wealth, and teaches the laws which govern its production, distribution, and consumption. This science must be carefully distinguished from politics, or the science of government, with which it is often confounded in the popular mind, but from which it differs as widely as do chemistry and geology; sciences which, though intimately related to each other, are nevertheless entirely distinct. So of the laws of wealth, and those of government. The former exist in nature, the latter are the enactments of men; yet it is evident they must be intimately connected, and should be in perfect harmony.

Wealth is a constant subject of legislation, hence the importance that its natural laws, to which all other laws should conform, be well understood by all, especially in a republic, the beneficence of whose legislation depends on the general intelligence of the people.

We define the term wealth, as including all articles or commodities to which man attach the idea of property, as houses, lands, ships, merchandise, cattle, furniture, etc., etc.-everything, in fact, that possesses value.

The term value, needs to be carefully defined. Political economy has sometimes, and very properly, been called the science of values. It treats wholly of them, hence the great importance of precision and accuracy in the use of the term. The popular use of the word will not answer our purpose.

By value, then, is meant the power which any article possesses of commanding an equivalent in exchange; in other words, value means exchangeability, and cannot be properly used in any other sense, when ap

plied to wealth. We must carefully distinguish between utility and value; otherwise there will be great confusion or circumlocution. We reject the terms sometimes employed, "intrinsic value," "value in use," "exchangeable value," and the like. We reject them not only as inappropriate and inconvenient, when used in this sience, but preposterous. The utility of any object is as distinct from its value, as its weight is from its color, and the two must never be confounded. An article may have many and great

utilities, but it can have but one value. India-rubber, for example, has many utilities may be used for a great variety of purposes, but it has but one value, viz., a certain number of cents per pound. Nor is the value of an article necessarily increased by the number of utilities it may be found to possess, providing the means for producing that article keep pace with the demand for it; and, as a general principle, the greater the demand for an article, the larger will be the arrangements for supplying it, and the cheaper it will be afforded, if there be no natural limits to its production. This is illustrated in the case of the commodity before referred to, which, while it had only one known utility, viz., that of removing pencil-marks, had a value, or exchangeable power three or four times as great as at the present, when it is known to possess a great many important utilities.

Having thus defined the term value, we proceed to show in what manner it originates, or what it is that gives this value or exchangeability to an article.

Value arises from the union of two conditions upon any article, or commodity; first, it must have cost labor, and secondly, it must be an object of desire. Without these two considerations, no object will have value; with these, any object will have it, whatever its character may be. If an article can be had without labor, however useful and desirable, like atmospheric air, water, etc., no one will give that which costs labor for it; of course it will have no exchangeable power or value. On the other hand, an object for which no one has a desire, will not have any value, howmuchsoever it may have cost to produce it.

No student of political economy should proceed in the science, until, by examination and reflection, he has fully settled in his own mind the true definition of value, and its origin and source. It is the foundation upon

which the whole superstructure of the science rests.

Although it be, as we have stated, that any article to have value must have both cost labor and be an object of desire, yet it is obvious that labor is the essential foundation of value, and therefore it becomes necessary to ascertain the precise meaning of that term.

By labor is meant the voluntary efforts of human beings to produce objects of value. We say voluntary, because no one will perform service voluntarily, except for a compensation, and that compensation must give value to everything so produced. Nothing else is labor. The involuntary and unpaid services of human beings are to be placed in the same category with the labor of horses and cattle.

With this definition, it is obvious that the value of every article, other things being equal, will be in proportion to the labor required to produce it. This may not, at first view, be in accordance with well known facts. For example, a diamond, which may have a value equal to 20,000 day's work, may have been obtained without any appreciable labor; but this was an accident. The same man who by chance fell upon this rare gem,

might hunt during his whole life afterward, without finding one of a tenth part of the value. Anything obtained by rare chance, or accident, does not come under the laws of wealth. Such things are found, rather than produced.

Again, objects of mere curiosity frequently have a value a thousand fold greater than the labor originally required to produce them. We are told that an antique volume of the Decameron, believed to be the only one in existence, sold for $20,000; while the labor it cost was not probably equal to five dollars. This is no exception to the rule, since all the labor of the world could not produce another original copy.

A chair from the May Flower would doubtless sell for the price of some dozens of a modern article, costing much more labor; yet this does not go to disprove the position that labor is the foundation of value.

It may be thought that gold and silver should be placed in the same list with gems and curiosities, but such is not the fact. The precious metals, although sometimes obtained by mere chance, are, on the whole, regularly produced by labor, and their value is determined like that of all other commodities, by the average amount of labor required to produce them.

Again, it may be supposed that articles protected by an accidental or designed monopoly, are an exception to the law of values. Far from it, since monopoly contravenes all the natural laws of production. When established by legal authority, its design is to exempt the favored article from the operation of the natural laws of trade, as in the case of patents, copy-rights, etc., etc. Under the influence of these, the more specific bearings of which we shall consider hereafter, commodities often exchange for several times their labor value.

While it is strictly true that labor is the foundation of all value, it is necessary to explain that it enters into the production of value in two forms, viz.: first, as the labor of the present, and secondly, as the accumulated or consolidated labor of the past. For the sake of convenience, we denominate the first labor, and the second capital; but in their nature they are identical. Each performs an important part, and both are ever inseparably connected in the production of wealth.

But since these two forms of labor are often owned by different individuals, one being the possessor of the power of present labor, while another is the owner of the accumulated labor of the past, it necessarily comes to pass, that although both are thus united in production, and copartners in almost all the business of mankind, they are necessarily competitors. Each must have a share of the whole amount of values created. What one gets, the other cannot have, therefore the competition must exist as long as production is carried on.

These form the two great competing, but not antagonistic, interests of modern civilization. We say not antagonistic, since capital is as much in need of the aid of labor, as labor is that of capital.

From the foregoing definitions, it will be seen that the services of horses, cattle, and machinery, in producing values, are not to be regarded as labor, but as the use or employment of capital. These cost a given amount of previous labor, are maintained at a given expense, and produce a given amount of value, as a compensation for the use of so much capital. Slaves are to be placed in the same category. As held and used they are capital, and as such only do they confer value.

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We have said that capital is the accumulated or consolidated labor of the past, but so is all wealth; what, then, is the distinction?

Capital is that part of wealth which is actually employed in reproduction. The simplest form of capital is that of an ax, or a spade. All tools, implements, machines, the land and cattle of the farmer, the ships, warehouses, and stock in trade of the merchant, the factory and raw material of the manufacturer, together with the money he employs in paying for his labor, etc.; every kind of property, in short, which is so employed or used that it aids directly in the production of wealth, must be classed as capital.

Having now defined the principle terms of the science, we are prepared to consider the several divisions of the subject. These are three, viz. :1st. The Production. 2d. The Distribution; and 3d., The Consumption of Wealth. And first

OF PRODUCTION.

If labor in some form produces all wealth, we are led to inquire into the circumstances which have a tendency to increase or diminish the power of this great agency.

In looking abroad on universal man, we find that labor is productive in very unequal degrees, in different communities.

In one, for example, if a man wants a chair, he goes to the forest, fells a tree, cuts it into proper dimensions, carries it to his workshop, forms its parts, and puts them together. His chair, rude and imperfect as it may be, has cost him the labor of two days. In another community we find a chair equally serviceable, and far more elegant, produced by the labor of Ön examination, we shall half a day. From what arises this difference? find in the latter case, one man was employed in cutting the timber in the forest; another in transporting it to the mill; another, with proper machinery converting it into lumber of suitable length and thickness; another, by the aid of a lathe forming the legs, and another the bottom of the chair; another, putting the parts together; and still another in painting and varnishing it. A great number of chairs are made by the combined efforts of all these individuals, so that the average value of each chair is only equal to the labor of one man for half a day.

All this is accomplished by a

DIVISION OF LABOR.

This is one of the most important principles in the science of production. It has already greatly increased the effectiveness of labor, and as the principle is one that may be greatly extended in its application, we have reason to suppose, judging from the past, that it will, sooner or later, be as universal as the nature of things will admit. It deserves, therefore, a detailed examination :

1. The extent to which it is already carried may be illustrated by taking the case of the boot manufacture.

In that business one person cuts the fronts; one crimps; one "cuts in;" one cuts the backs; one cuts linings; one pastes together; one strips out the sole-leather; one cuts the soles; one cuts and makes the heels; one stitches the backs; one sides up; one binds; one bottoms; one "buffs;" one trees; one packs, marks, etc.

Here are sixteen different hands employed in producing a single boot. In some cases, even a greater number are employed.

Now that which is true of this, is equally true of all wholesale manufacturing. All such is considered only a division of labor. This being the case, it becomes us to inquire into the particular advantages and disadvantages incident to it.

ADVANTAGES OF DIVISION OF LABOR.

1. It gives improved dexterity. The man who is employed constantly in a single operation, acquires a dexterity and aptitude unknown to him who is frequently changing from one operation to another. This is so obvious as to need no proof; yet ocular evidence of the fact, as exhibited in workshops, gives a greater impression of its importance than any statement can make.

2. It saves time. When a workman is obliged to change from one place to another, or when he changes from one operation to another, it requires time to adjust himself to his new position. If these changes are frequent, as they must be, where one person manufactures an entire article, a great waste of time must be the inevitable result.

3. Facilitates the invention of tools and implements. When a workman is confined to a single operation, it is quite remarkable how soon his mind suggests improvements in the particular tool with which he works. Directed constantly to a single point, his mind soon discovers the best possible contrivance for effecting his particular object. Hence we always find that division of labor gives rise to discovery of new and improved implements and machinery.

This may be seen in the case of the shoemaker. In olden times, he needed little more than his cutting-knife, lap-stone, awl, and hammer. His whole "kit" was comprised in half a dozen articles; now they amount to half a hundred, some of them costly, and powerful machines.

4. Secures better adaptation of physical and mental labor. This is a consideration of great magnitude.

In printing, for example, by division, a great part of the labor is performed by females and persons of little physical strength, who could not be employed at all if they were obliged to perform all the operations connected with that business.

The same is true of the manufacture of cotton and woolen goods, shoes, clothing, &c. In all these branches of industry and many others, women, and even children of tender age, can execute certain parts of the work to great advantage. By this arrangement whole families are employed in production who would otherwise be obliged to rely for support on the labors of the father.

It is not physical power alone that, by this process, is made more effective. The same principle is equally applicable to mental or intellectual power. Some operations in the mechanic arts require intelligence and ingenuity of a high order, but very little muscular strength. Others, again, require great strength of muscle, but little effort or action of the mind. Now, by this arrangement, the feeble, having mind, and the stupid, having strength, are both made equally efficient, and a work is accomplished that could otherwise be done by neither.

In estimating the productive power of any community, we must take this fact into account. Where no division of labor takes place, production must be comparatively small, however industrious the laboring population may be. It is when many work, or rather when all work, as they can