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POLITICAL ECONOMY. 



tageous to a country precisely to the degree to 

 which it is profitable to those engaged in it, and, 

 therefore, that the immediate interest of the mer- 

 chant, under the actual circumstances, is the infal- 

 lible criterion of the national interest; while others, 

 on the contrary, and with them most legislators, 

 practically act upon the doctrine, that the immediate 

 interest of the merchant is not in all cases a crite- 

 rion of the permanent national interest. The doc- 

 trine resolves itself into this maxim, namely, that 

 the interest of a nation that was to exist only for 

 two or three years, and then to be swept away by a 

 pestilence, or swallowed up by an earthquake, and 

 of a similar one that was to exist for as many cen- 

 turies, would lead to precisely the same policy for 

 the present year in respect to foreign trade ; so that 

 no regard is to be had, in commercial regulations, 

 to the vicissitudes of war and peace, and other 

 changes incident to a nation. In a question, then, 

 of vital importance, which has now been agitated 

 for more than two centuries, the theoretical econo- 

 mists are divided. We think we may say, then, 

 tliat the real question which gave rise to the mer- 

 cantile system is still involved in much obscurity. 

 See articles Mercantile System, and Balance of 

 Trade. 



The manufacturing system has been ranked as 

 another economical theory; but it can hardly be 

 regarded in this light. It supposes that a nation 

 promotes its wealth and productive capacity by 

 manufacturing for itself all those commodities, for 

 the manufacture of which it is adapted by its cli- 

 mate, agricultural pursuits, and the habits and 

 character of its people. It is not now disputed that 

 manufacturing will contribute to the aggregate 

 value of annual products, as well as agriculture or 

 commerce. The only questions are, 1. What de- 

 scriptions of manufacturing industry will increase 

 the productive resources of a particular country; 

 and, 2. Whether it should be an object of legislation 

 to foster and promote these branches of industry. 

 Those opposed to any such legislative interference, 

 namely, the advocates of free trade, assume that 

 the national industry, left entirely free, and open to 

 a competition with that of other nations, will infal- 

 libly take those channels by which its aggregate 

 results will be the greatest. The foundation of the 

 doctrine of the let us alone policy was laid by Adam 

 Smith, since whose time its advocates have assumed 

 it upon the principles by which it is supported in 

 the Wealth of Nations. Smith rests the doctrine 

 upon two propositions : 1. " That every individual 

 can judge, better than any statesman or lawgiver 

 can do for him, what is the species of industry on 

 which he can best employ his capital:" and, 2. 

 " The study of his own advantage naturally, or 

 tather, necessarily, leads every individual to prefer 

 that employment of capital which is most advanta- 

 geous to society." The doctrine of free trade rests 

 wholly upon these two propositions. Our limits 

 will not allow us to consider the arguments in fa- 

 vour, or against their soundness as the guides of 

 legislation in all cases. For these the reader is 

 referred to the works mentioned at the end of this 

 article, also to Mr Phillips's Manual of Political 

 Economy. It is sufficient to remark here that the 

 doctrine of free trade must be, as yet, considered 

 merely a theory. 



Another theory, in relation to national wealth, 

 was that of Quesnay, denominated the agricultural 

 system (see Physiocratic System), namely, that agri- 

 cultural is the only productive sort of labour, since 

 this affords a surplus (to wit, rent), after paying the 

 labourer; whereas, all other kinds only replace the 

 V5lue of the stock, and pay the wages. This theory 



is, however, entirely exploded ; and, besides, it is 

 of a kind not calculated to do any practical injury; 

 for no nation would think of legislating upon the 

 assumption, that, because the raising of cattle, and 

 thus producing hides, was, according to this doc- 

 trine, a productive labour, and that of tanning the 

 hides, and making the leather into shoes, was not 

 productive, or left no net gain ; therefore, the two 

 latter branches might as well be discontinued. 



These doctrines go to the general national indus- 

 try and growth in wealth ; others are partial in 

 their application, of which we will notice a few that 

 are adopted by those writers who are the most dis- 

 posed to consider political economy a science. One 

 of these doctrines, stated by Adam Smith, is, that 

 the wages of common day labour finally fix at the 

 point at which they barely afford the labourer the 

 means of subsistence, and of continuing the race of 

 labourers. This is called by the followers of Adam 

 Smith the '' natural rate of wages." It is usually 

 assumed in their writings as settled. But it is not 

 pretended that the wages of labour are the same 

 in the different countries of Europe; on the con- 

 trary, it is everywhere taken for granted, that they 

 are higher in some countries than in others. It 

 would follow from this doctrine, that in those coun- 

 tries the necessary expense of supporting and re- 

 producing the labourers, is in proportion to the 

 wages paid in them respectively; whereas the fact 

 is quite otherwise. And what entirely confutes the 

 notion of any such " natural rate" of wages, is, that 

 the rate varies in different kinds of labour, in which 

 the expense of supporting, instructing, and repro- 

 ducing the labourers, is apparently equal. The 

 very statement of this doctrine presupposes a natu- 

 ral rate of expenditure for shelter, clothing, and 

 food, for the labouring classes, a supposition which 

 has no plausibility in theory, and no support in fact. 

 The doctrine of a natural rate of wages of the 

 labouring classes is, indeed, entirely fanciful. It is 

 very true that the present pecuniary interest of those 

 who hire and those who are hired, is at variance, as 

 well as that of those who buy and those who sell ; 

 and the party having the greatest advantage in 

 either case, will, generally speaking, use it ; and, 

 accordingly, where the labourers are poor, thriftless, 

 and improvident, saving nothing, and being obliged 

 to depend upon the earnings of the day for their 

 food, they put themselves very much in the power 

 of their employers. If to this be added a super- 

 fluity of labourers, and a want of employment for 

 all, the advantage of the employers is increased, and 

 the labourers will accordingly be reduced to a lower 

 and lower compensation, until, perhaps, at length, 

 the wages paid will not more than supply them with 

 the poorest fare, and the meanest clothing and ac- 

 commodations. But the degree to which they may 

 be reduced by the operation of these causes, will 

 evidently depend upon the situation of the country, 

 the demand at successive times for labour, in com- 

 parison with the supply of labourers and, most of 

 all, upon the character of the labourers themselves. 

 To say that there is some point at which these cir- 

 cumstances are naturally balanced, in all countries 

 and all stages of economical improvement at which 

 the "natural rate" of wages is graduated, seems to 

 be a proposition too fanciful and vague to deserve 

 the name of a theory. But such is the doctrine of 

 the economists. 



Another leading doctrine of Adam Smith and his 

 followers grows out of the state of the English poor 

 laws. It is, that all provision by law for the sup- 

 port of the poor is useless and injurious. This doc- 

 trine is fortified by Mr Malthus's theory of the fata, 

 necessity of starvation. He maintains that human 



