The property in circulation is not augmented, but the coin has received a new impression, or got increased weight.It may, however, happen, and very often does happen, that, during the process, a sort of factitious improvement is introduced, which, while it lasts, is sometimes nearly equivalent to a real improvement.
Suppose a merchant, seeking to strike out a new branch of trade, exports to some distant country, and sells there to advantage, an article of luxury the produce of the community to which he belongs, and in return receives for it a commodity, a simple utility in demand among his countrymen.Let the former commodity be lace, and the country to which it is exported E, and the latter commodity barilia, and country to which it is imported D.
In process of time the trade increases, until a large quantity of lace is exported, and a large quantity of barilla imported.Suppose, farther, that the steady demand for the lace, joined to other circumstances, animates ingenuity to facilitate the process of manufacture, and that the article is before long produced at half the outlay it cost when first exported.
In the ordinary course of matters, the diminished cost of production should be followed by a correspondent reduction in the price it is sold at in E.Two circumstances, however, may prevent this.The intercourse between D and E may be very difficult, and clogged by many obstructions, and the community E may be very numerous, and may easily absorb a large amount of the article.Both circumstances would help to diminish the effects of competition; the former by lessening the number of competitors, the latter by preventing the actual competition induced from operating fully.It might in consequence happen, that lace, though produced with double facility, sold in E at nearly the same price as at first.If we suppose that commodity to be a pure luxury, this would be no disadvantage to E, for the quantity used would serve exactly the same purpose as if its amount had been doubled;while, on the other hand, it would be so far an advantage to D, that it would place somewhere there the command of all.the labor which in E was actually paid for.Among the members of the society D double the quantity of barilla would be somehow or another shared, that the labor expended in procuring it was entitled to.The advantage would not certainly, of necessity, have that healthy and vivifying effect which real improvement occasions, for it might not spread through the whole community, but might be dissipated in luxuries by the merchants, manufacturers, and artisans engaged in acquiring it.If, however, in other branches of trade and of manufactures for exportation, similar facilities were introduced, and similar large returns obtained, and if in all the departments of domestic industry great real improvements take place, the advance of the whole society would be uniform, and not much unlike what would flow from an universally real improvement.
Should two societies in the same way trade together in mere luxuries, a sort of factitious improvement might be created by the effects of a restricted competition.The merchants who engaged in the trade would, in the first place, acquire all the labor saved by the overcharge of the commodities they bought and sold, and the benefits might be diffused more or less generally on both societies.
When, by the removal of restrictions, and the increased capacity of industry to fabricate the goods in request as luxuries, a free competition is induced, all these factitious advantages disappear.Each adventurer endeavoring to beat down his opponent in the foreign market, the productions of the industry of remote countries come to be offered there, for the lowest amount, at which the strength of the principle of accumulation can permanently continue to produce them.They may even pass much below this; for vanity, capricious in its tastes, soon begins to despise altogether what may be every one's purchase, and leaves what it once highly prized as now vulgar and unworthy regard.In the supposed case of the exportation of lace, that commodity might have triple the labor expended on it, and its quantity might be increased sixfold, and yet might bring in a smaller return than it did before.The ample revenues which the merchant, the manufacturer, the artisan, derived from the fabrication of such articles become reduced to the lowest amount that may suffice to move their respective productive faculties.Other branches of manufacture share the same fate; the whole machinery of industry is clogged and encumbered by the heavy additional burden thrown on it, and distress and discouragement pervade the community.
3d.There are, however, very few, if any, commodities which are purely luxuries.Although vanity is in part the cause of the estimation in which very many are held, and though it gives to some perhaps nearly their whole value, nevertheless it seldom exists in any alone.It almost always applies itself, as I have already observed, to something ministering in some degree to real wants or pleasures.There is beneath almost every luxury a substratum of utility of greater or less depth.
