H2 POLITICAL ECONOMY 



There is yet a third source of gain to the manufacturing 

 community: the labourer who produces the goods earns his 

 wages by the manufacture, and this is an advantage to him. In 

 the diagram, the area P'D'D" represents the wages paid for 

 labour alone. The length of the lines between Y and P'D' 

 represents the wages of labour per unit of goods, increasing as 

 the quantity of goods required increases. This is lost to the 

 community if the manufacture is stopped. Thus the whole sum 

 paid by the consumer is the area M D D" ; and this is made up 

 of three parts, one of which is the profit to the trader, one the 

 interest to the capitalist, and one the wages of the labourer ; all 

 these advantages are lost if the manufacture ceases. 



The gain of the labourer does not resemble the profit of the 

 trader, or the interest of the capitalist. The profit of the trader 

 is the difference between his valuation of the goods and what he 

 gets for them. If he does not sell his goods he still has his 

 goods, he only loses the profit. Similarly, if the capitalist does 

 not sell his capital, he still has his capital. Now, the area P'P D D' 

 represents the profit made by the capitalist on the particular 

 employment of his capital, and this is all that he loses if unable 

 to sell that capital ; but the area P'D'D" represents the whole 

 sum received by the labourers, not their profit. The profit 

 of the labourer may perhaps be considered as the excess of 

 wages which he earns in a particular trade, over that which 

 would just tempt him to work rather than starve or go into the 

 workhouse. 



If the consumer purchases the article for simple unproductive 

 consumption, then the loss to him is only represented by the 

 area D M N. If, however, a community purchases goods, and 

 consumes them productively, then, by the cessation of the trade, 

 they in their turn lose the interest on the capital they employ, 

 and the labourers of the community lose their wages ; so that, in 

 that case, the loss to the buyer, who cannot be classed as an 

 immediate consumer, is made up of three parts, similar to those 

 enumerated in the case of the seller. 



Taxes on Trade. 



Having distinguished between the three distinct advantages 

 given by trade, I will now consider the incidence of a tax on 



