Bevan - Sir William Petty (1894)/IV
CHAPTER IV.
LAND—LABOR—VALUE—RENT.
[Note.—The following abstract was made before the publication of Dr. Cunningham's second edition of his History and also before I had seen Ricca Salerno's essay on "Idee finanziarie del Inghilterra" in the Giornale degli Economisti, 1884. Pages are quoted from collected edition of Petty's works, Dublin, 1769.[1]]
In the "Treatise on taxes and contributions" Petty says that labor is the father of wealth, and land the mother (31). This expression offers us a convenient division. We will first of all gather together his statements on land itself as a factor in national wealth.
The destiny of a country is decided by the territory which it occupies. The richness of the soil enables it to support a large population; to use his own words, "A thousand acres that can feed a thousand souls is better than ten thousand acres of no more effect" (219). In a limited territory all government charges are smaller. There is greater division of labor, hence greater opportunity for acquiring wealth (219). Certain countries have natural advantages in manufactures and in trade (220). Holland is flat. It is naturally adapted for windmills (220). The fact, too, that it is placed at the mouth of three large rivers all flowing through rich countries, keeps in its hands the lucrative navigation of those streams (221). Proximity to navigable waters, by diminishing the cost of carriage, gives one country an advantage over another not so placed. Again, if a country can be easily defended against foreign enemies, it saves on this head much expenditure of money (218). A conspicuous case of the fortune of a city being determined by natural location is pointed out in London (27 and 28). It will always be the greatest city in England, because the Thames is the most commodious river in the island, and because London is placed on the most commodious part of the Thames. The situation of Ireland proves that it is naturally adapted to trade with America, for in the southwestern part of that island the most commodious ports are found (354). Petty believed that these natural differences might be expressed in exact language. In addition to comparative meteorological observations, he proposed that the natural advantages of different soils should be mathematically estimated by agricultural experiments (335).
The main factor in the creation of wealth is labor. Without it natural advantages are insufficient, and by it natural disadvantages can be overcome. Ireland, he points out, has many natural advantages. Why is it such an undeveloped country? He answers by declaring that the Irish themselves "are unprepared for trade" (354), because their necessities are few. They want no foreign commodities but tobacco. Where there is no internal trade, there is no incentive to labor. "Husbandmen, seamen, soldiers, artizans and merchants are the very pillars of any commonwealth; all the other professions do rise out of the infirmities and miscarriages of these" (223). In these different forms labor has not the same value. More is to be gained by manufactures than by husbandry, and by merchandise than by manufactures (220).
In the highest place in the scale of labor is the seaman. "Every seaman," he says, "is not only a navigator, but a merchant and also a soldier." The wage of a husbandman is only one-third of that of a seaman. Holland is the model commonwealth, because in Holland there is little plowing or sowing of corn or little breeding of cattle. They have rid their hands of the "old patriarchal trade of being cow-keepers" (232). As the trades and arts increase so the trade of husbandry will decrease. It would be advantageous, if the husbandmen of England would become tradesmen (233). Cattle and corn could be imported from other countries.
We see from these views that, when labor is said to be the father of wealth, we must understand the expression in a limited sense. Labor can be employed in two ways, either in order to local wealth or to universal wealth. Under the last, he understands shipping and merchandise, to which he gives the preference. Under local wealth he reckons the building of houses, planting fruit trees and timber land, inclosing common land, works of defense, the building of work-houses, construction of roads, making rivers navigable, erection of factories of various kinds (310). The ultimate effect of labor applied to the production of universal wealth is "abundance of silver, gold and jewels, which are not perishable nor so mutable as other commodities, but are wealth at all times and in all places." "The labour of seamen and freight of ships is always of the nature of an exported commodity, the overplus whereof, above what is imported, brings home money" (224).
Petty's reason for assigning these advantages to labor applied in the production of non-perishable goods is political. He believes in a strong government. He wishes to strengthen the hands of England against her foreign neighbors and set her above possible attack. In the short tract entitled "Verbum Sapienti," he answers an imaginary objector, who asks, Is this untiring industry to be unending? It is to continue, he says, until "we have certainly more money than any of our neighbour states" (488). This principle he consistently applies to all forms of activity. He asks, Does such labor "enrich the kingdom?" (486). In order to procure money for public uses people must either work harder or introduce labor-saving processes. The great misfortune of Ireland is, as we have seen, the simple life led by the natives. They need so few goods. It would be well to beget in them a taste for luxury in order to make them spend and, consequently, earn more. Splendor, art, and industry will be increased "to the great enriching of the commonwealth" (356). Holland—so frequently held up for imitation—has become what it is by its large share in foreign trade (225).
A country with a large population is much richer than a thinly-settled country. He disapproves of the New England colonies, because human labor is wasted there (266). He is fertile in devising plans for making England more populous; i. e., increasing its labor power. He does not wish to see Ireland sunk under the sea. He did not want to destroy its population, but he was most earnest in proposing the transplantation of all the native Irish into England (253). With equal consistency he proposed to depopulate Scotland for England's benefit, and advised the recall of the colonists from America (269).
When Petty treats of the advantages which result to a country from great cities we find how far he carries his arguments in favor of a dense population. Granting that London be seven times larger than it is, would it be more difficult to provide it with the necessaries of life (113)? He thinks not. Meat and drink can easily be brought from a circle about the city, extending not more than thirty-five miles from its limits. Fuel and timber can be as readily provided as at present. Such a city can be defended at a smaller cost than if its inhabitants were scattered. It would be less open to dangers from factions and rebellions. The charges of administering justice, of maintaining religion, would be less. The cost of collecting taxes would be diminished, and their amount larger. If there is no distinct gain in foreign commerce there would be certainly no loss. The gain by manufactures will be increased, because they will be greater in quantity, and better in workmanship. For, he says, "each manufacture will be divided into as many parts as possible whereby the work of each artisan will be simple and easy..... In the making of a watch, if one man shall make the wheels, another the spring, another shall engrave the dialplate, and another shall make the cases, then the watch will be better and cheaper, than if the whole work be put upon any one man" (116). A large city has a further advantage. The cost of carriage and freight on manufactured goods falls away, when the goods are made in the place, where they are shipped. All kinds of improvements in the arts, all educational reforms, are favored by density of population.
The security of the state depends on its wealth. Its wealth depends on productive labor. So its policy should be directed to seeing that its subjects put forth their energy to the best advantage. The first duty of an enlightened state is to know its condition. Hence follows the need of statistics. All unprofitable work should be discouraged. The number of those seeking the various learned professions should be limited. (12). It would be easy to find out how many lawyers, doctors and priests are needed. The state control of education, with a rigid selection of those fitted to serve in these capacities, would do away with the evils of parental caprice. The legal system should be simplified in all its parts, in order to diminish a class of men whose gains are like those of gamesters, because their labor produces nothing. The principles of the criminal law ought to be modified. The state should remember that, by killing any of its members, it punishes itself. Pecuniary fines, or a state of slavery which gives the state control of the criminals' labor, should take the place of the ordinary penalties (60). The religious policy of the state ought to be guided by toleration. He cites many examples to prove that heterodoxy and trade go together (227). He commends Holland for offering a refuge to the persecuted, and thus increasing her wealth. So, too, the whole system of taxation should be directed towards encouraging productive industries. The trading and manufacturing classes should be carefully treated (22). On the other hand, the unproductive classes should bear the greatest burdens. Their property can only be made productive by changing hands. Beggars and idle persons should have work provided for them by the state (14). Their work might be looked upon as unproductive. Yet as crime is so largely due to idleness, the charge of the criminal classes—the menance of the state's security—would be reduced. All public works and internal improvements could be systematically carried out by using the labor of the unemployed classes. The educational system should be placed under the control of the state. Its whole aim should be directed to develop human energy and human skill. Education which confines itself to the study of unprofitable subjects is only a preparation for a merely speculative life, and is consequently worse than useless. The maintenance of industrious habits, even at an apparent cost, is insisted upon (48). If a certain industry becomes temporarily unprofitable it should not be discontinued. Those employed in it may by inaction lose their aptitude for labor. He cites with approval the case of Norwich where children were employed, and proposes that child-labor should be introduced into other parts of the country (276). Labor, then, is the corner-stone of the prosperity of the state. He does not forget to assure us, however, that a millenium may come when such forms of human activity may pass into something higher. In this happy time man can follow the end for which he was created—the cultivation of the powers of the intellect (488).
Now that we have treated of both factors, land and labor, which create national wealth, the next thing is to determine their relation to one another. An equation between land and labor is "the most important consideration in political œconomies"(344).[2] This equation will be an expression of value. Labor not only creates value but it is the measure of value. He uses the following illustration: "Let a hundred men work ten years upon corn, and the same number of men the same time upon silver; I say, that the neat proceed of the silver is the price of the whole neat proceed of the corn" (30). The natural rent of land is the proceed of the harvest minus the food and necessaries of the laborer. The value of this in money is the amount of money a man can save in the same time over and above his expenses while mining silver during the same period of time.
In a later work, the "Anatomy of Ireland," he makes another attempt at expressing the value of natural rent. With the one I have already given he is discontented, because in it he has introduced the factor "labor," which should have been kept out. This difficulty he avoids in a curious way. Natural rent is expressed in the terms of the commodities raised upon the land—butter, cheese, corn and wool—whatever they may be. For accuracy, he makes the following supposition:[3] "Suppose two acres of pasture land inclosed, and put thereunto a weaned calf." Suppose this animal to become one hundred pounds heavier. A hundred-weight of such flesh he supposes to be fifty days' food. This amount and the interest on the value of the calf is the value, or year's rent of the land. If a man's labor can make the said land yield sixty days' food, then that overplus is the value of the man's labor or wages, both being expressed by the number of days' food. The day's food is the common measure of value (345). By the expression day's food, he understands the hundredth part of what one hundred men, "eat so as to live, labor and generate." The food is the easiest got food in the respective locality. An ounce of silver is equivalent to a day's food in Peru; the same amount in Russia is equivalent to four days' food by reason of freight and hazard of carrying it thither.
He ingeniously applies this equation for finding the value of labor-saving inventions, for expressing mathematically the ratio between demand and supply in artistic work, and claims that it can be extended further.
In the last essay on Political Arithmetic he gives us an insight into the method by which he reached this principle. "If there were but one man living in England, then the benefit of the whole territory could be but the livelihood of that one man. But if another man were added, the rent or benefit of the same would be double .... for if a man would know what any land is worth, the true and natural question must be, how many men will it feed" (252)?
Hitherto we have been confining our attention to what Petty calls intrinsic value (37). The extrinsic or accidental value is much more difficult to estimate. Roughly speaking, the extrinsic value of land might be given by taking the average of all bargains made within a definite period of time (36). An analysis of the causes which bring about the fluctuations in supply and demand should, however, be made. Why is it that rents in Ireland are lower than they are in England? He explains the difference by assigning for it the following causes (32): Rebellions, uncertainty of legal title, paucity of people, absenteeism, bad administration of justice. The rent of land will fall when trades and arts increase (233). This may be only temporary, for people who live in towns spend more commodities, and make greater consumptions, than when they lived more sordidly (256). Great need of corn raises its price, and consequently the rent of the land on which it is grown. "If the corn which feedeth London.... be brought forty miles thither, then the corn growing within a mile of London.... shall have added unto its natural price, so much as the charge of bringing it thirty-nine miles doth amount unto" (35). Again, the rent of land near populous places will increase by reason of the pleasure and honor of having land there. In different countries the rent of land will differ, according to the natural, civil and religious opinions of the people living in the country (37).
The wages of labor and the rent of land vary inversely. If the wages of labor get a larger share of the product then rent must fall (233). We have already seen from his experiment for finding natural rent what he understands by the natural wages of labor. As he estimated in a rough way the extrinsic value of the rent of land, so the value of each individual as a labor unit might be had by using the ordinary or average price for a slave in the markets of the East. There is, however, a more exact way. Suppose the people of England be 6 millions and the expense annually per head 40 millions. Let the yearly rent of land be 7½ millions, and the profit on personal estates be the same, i. e., together 15 millions. It is obvious that the difference between 15 millions and 40 millions has been created by the labor of the people (476). The mass of mankind are worth 20 years purchase, as well as land. This whole sum, divided by six millions, the number of people, gives the value of each individual—£69. Natural dearness or cheapness depend upon the amount of labor, for all wealth is the creation of labor past or present (477). This does not imply that the laborer is to receive all the profits. He quotes with approval the statute fixing the rate of wages, and desires that it should be adapted to the change of times (39).
Petty's distinction between intrinsic and extrinsic value is explained in a manuscript dialogue on selling diamonds, from which I take the following extract: "I will first take notice that the dearness and cheapness of diamonds depends upon two causes; the one intrinsic, which lies within the stone itself, and the other extrinsic and contingent such as are (1) the prohibitions to seek for them in the countries from whence they come. (2) When merchants can lay out their money in India to more profit upon other commodities, and therefore do not bring them. (3) When they are bought, upon fears of wars to be a subsistence for exiled and obnoxious persons. (4) They are dear near the marriage of some great person, where great numbers of persons are to put themselves in splendid appearances. For any of these causes, if they be very strong upon any part of the world, they operate on the whole. For if the price of diamonds should rise in Persia, it shall also rise preceptably in England, for the great merchants all the world over do know one another, do correspond, and are partners in most of the considerable pieces, and do use great confederacy and intrigue in buying and selling them."
- ↑ See: William Petty - Tracts; chiefly relating to Ireland (1769).
- ↑ This expression has escaped the notice of Dr. Cunningham "History of English Industry," p. 232.
- ↑ Cf. Loria "Analisi della teoria capitalista," ii, p. 170.