Probable error of Dr Adam Smith in representing every increase of the revenue or stock of a society as an increase in the funds for the maintenance of labour - Instances where an increase of wealth can have no tendency to better the condition of the labouring poor - England has increased in riches without a proportional increase in the funds for the maintenance of labour - The state of the poor in China would not be improved by an increase of wealth from manufactures.
THE professed object of Dr Adam Smith's inquiry is the nature and causes of the wealth of nations. There is another inquiry, however, perhaps still more interesting, which he occasionally mixes with it, I mean an inquiry into the causes which affect the happiness of nations or the happiness and comfort of the lower orders of society, which is the most numerous class in every nation. I am sufficiency aware of the near connection of these two subjects, and that the causes which tend to increase the wealth of a state tend also, generally speaking, to increase the happiness of the lower classes of the people. But perhaps Dr Adam Smith has considered these two inquiries as still more nearly connected than they really are; at least, he has not stopped to take notice of those instances where the wealth of a society may increase (according to his definition of 'wealth') without having any tendency to increase the comforts of the labouring part of it. I do not mean to enter into a philosophical discussion of what constitutes the proper happiness of man, but shall merely consider two universally acknowledged ingredients, health, and the command of the necessaries and conveniences of life.
Little or no doubt can exist that the comforts of the labouring poor depend upon the increase of the funds destined for the maintenance of labour, and will be very exactly in proportion to the rapidity of this increase. The demand for labour which such increase would occasion, by creating a competition in the market, must necessarily raise the value of labour, and, till the additional number of hands required were reared, the increased funds would be distributed to the same number of persons as before the increase, and therefore every labourer would live comparatively at his ease. But perhaps Dr Adam Smith errs in representing every increase of the revenue or stock of a society as an increase of these funds. Such surplus stock or revenue will, indeed, always be considered by the individual possessing it as an additional fund from which he may maintain more labour:
but it will not be a real and effectual fund for the maintenance of an additional number of labourers, unless the whole, or at least a great part of this increase of the stock or revenue of the society, be convertible into a proportional quantity of provisions; and it will not be so convertible where the increase has arisen merely from the produce of labour, and not from the produce of land. A distinction will in this case occur, between the number of hands which the stock of the society could employ, and the number which its territory can maintain.
To explain myself by an instance. Dr Adam Smith defines the wealth of a nation to consist. In the annual produce of its land and labour. This definition evidently includes manufactured produce, as well as the produce of the land. Now supposing a nation for a course of years was to add what it saved from its yearly revenue to its manufacturing capital solely, and not to its capital employed upon land, it is evident that it might grow richer according to the above definition, without a power of supporting a greater number of labourers, and, therefore, without an increase in the real funds for the. maintenance of labour.
There would, notwithstanding, be a demand for labour from the power which each manufacturer would possess, or at least think he possessed, of extending his old stock in trade or of setting up fresh works. This demand would of course raise the price of labour, but if the yearly stock of provisions in the country was not increasing, this rise would soon turn out to be merely nominal, as the price of provisions must necessarily rise with it. The demand for manufacturing labourers might, indeed, entice many from agriculture and thus tend to diminish the annual produce of the land, but we will suppose any effect of this kind to be compensated by improvements in the instruments of agriculture, and the quantity of provisions therefore to remain the same. Improvements in manufacturing machinery would of course take place, and this circumstance, added to the greater number of hands employed in manufactures, would cause the annual produce of the labour of the country to be upon the whole greatly increased.
The wealth therefore of the country would be increasing annually, according to the definition, and might not, perhaps, be increasing very slowly.
The question is whether wealth, increasing in this way, has any tendency to better the condition of the labouring poor. It is a self-evident proposition that any general rise in the price of labour, the stock of provisions remaining the same, can only be a nominal rise, as it must very shortly be followed by a proportional rise in the price of provisions. The increase in the price of labour, therefore, which we have supposed, would have little or no effect in giving the labouring poor a greater command over the necessaries and conveniences of life. In this respect they would be nearly in the same state as before. In one other respect they would be in a worse state. A greater proportion of them would be employed in manufactures, and fewer, consequently, in agriculture. And this exchange of professions will be allowed, I think, by all, to be very unfavourable in respect of health, one essential ingredient of happiness, besides the greater uncertainty of manufacturing labour, arising from the capricious taste of man, the accidents of war, and other causes.
