Manual of Political Economy/Book 1/Chapter 5

by Henry Fawcett

CHAPTER V.

ON THE PRODUCTIVE POWER OF THE THREE REQUISITES OF PRODUCTION.

Variations in the productive powerTHE three requisites of production, labour, appropriate natural agents, and capital, have now been discussed. The subject of the production of wealth will not be complete without an investigation of some of the laws upon which depends the amount or degree of productiveness of each of these requisites. All the materials upon which labour and capital are employed, are produced either directly or indirectly from the land. Wool is not a product of the land like cotton and timber, but the sheep from which the wool is clipped are fed by food obtained from the land. Land, labour, and capital are, therefore, the three requisites of production. The most casual observer will have noticed that each of these varies greatly in productiveness at different times, and in different places. of land,Some of the richest tracts of land in England were not long since an uncultivated morass; Cambridgeshire and Norfolk are now amongst the largest corn-producing counties, yet Cambridge was once the home of the bittern and snipe, and Norfolk was little better than a rabbit-warren. At the present time England possesses land of every degree of fertility; the rich loam land of Sussex and the Lothians will let for 4l. an acre; and large tracts of land on the moors of Yorkshire, if given to a farmer rent free, would not pay to be cultivated. There is also the greatest difference in the efficiency of labour. labour,It has been calculated that an English mower will do as much work in a day as three Russian serfs, and the contractors for the French railways found that an English navvy was worth two French labourers. Such differences in the value of labour mainly depend upon superior strength and stamina, but still greater differences arise from superior skill; many operations in the manufacture of commodities require, perhaps, a delicate touch or a quick dexterity which no amount of untrained labour could supply. and capital.Capital, directed by superior knowledge, may effect what before was impossible; mines are now worked which no amount of labour or capital, unaided by the steam-engine, could have drained; and the application of a hundred times as much labour and capital would not produce the cloth which is now woven by the spinning-jenny and the power-loom. These considerations may, perhaps, suggest the opinion that we shall be obliged to call in the assistance of every science in order to investigate the laws which determine the productiveness of land, labour, and capital. For it may be said, agricultural chemistry makes known the constituents upon which depend the fertility of the soil; the difference in the stamina and strength of English and Russian labourers must be elucidated by appealing to physiology, and to other sciences. Again, the efficiency of machinery must be explained by the principles of mechanics. It, therefore, manifestly becomes necessary to place some limitation upon the scope of political economy, unless it is intended to embrace a vast number of other sciences. Now, it will be remembered, that no accurate definition of political economy was attempted to be given at the commencement of this work. It is far better that the reader should have the definition evolved for him as the subject gradually progresses.

A necessary limitation of our inquiries into the cause of this variation.In the introductory chapter we described political economy to be the science which investigates the laws that determine the production, the distribution, and the exchange of wealth; it was, however, at the same time stated that this was rather a general description than an accurate definition. It is not an accurate definition, for it is already perceived that, even concerning the first branch of the subject, political economy does not investigate all the laws which concern the production of wealth; for if it did investigate those laws, chemistry, physiology, mathematics, and various other branches of knowledge, would form a part of the science of political economy. It will be necessary, therefore, to place some limit upon our investigations; and the necessary limitation is provided by assuming that the facts which are acquired from other sciences are known, or at any rate are supposed to be true. Thus political economy assumes all that we can tell at the present time with regard to the fertility of the soil. It is not the business of political economy to decide whether chemistry can suggest any particular manure which will greatly increase the productiveness of the land; but if the land, by any such cause, is rendered more fertile, then political economy would trace the consequences of this increased fertility upon the production, the distribution, and the exchange of wealth. Again, it would be foreign to the subject of political economy to prove, by a physiological argument, the causes upon which the inferior strength of the French and Russian labourers depends; but political economy, assuming that this inferiority exists, without explaining its cause, or suggesting a remedy for its removal, traces its consequences upon the production, the distribution, and the exchange of wealth.

Returning now to the immediate subject of this chapter; we have to consider the productiveness of the land, labour, and capital, not as they depend on physical causes, but as they are determine by production on a large and small scale, by division of labour, by the accumulation of capital in joint-stock companies, and by various other such circumstances which we shall proceed to notice.

The productiveness of land.The productiveness of land does not depend entirely upon its fertility; for the quantity of labour and capital which may be required to make the produce raised from the land available for consumption forms a very important element in estimating its productiveness. The rich alluvial plains of the Mississippi are almost unsurpassed in fertility; but a considerable portion of the wheat which is grown there is consumed in Europe; and the cost of carrying this wheat to the European markets is virtually so much deducted from the productiveness of the soil upon which the wheat was grown. When the valley of the Mississippi possesses population so dense as to consume all the wheat there grown, the land, although it may be not more fertile, will be more productive of wealth; for the wheat will no longer be wanting an utility, which, amongst others, gives it the character of wealth, namely, of being in the place where it is required to be consumed: an utility which cannot now be conferred upon it without considerable cost. It is affected by the facilities of transporting produce.Everything, therefore, which facilitates the transport of produce, increases the productiveness of land. A great portion of the most fertile land in the world is entirely unproductive. Products might be raised from it which would be eminently serviceable to man, but various obstacles interpose which render these products unavailable for consumption. The most splendid pine-trees are often seen rotting on the sides of the Swiss mountains, because it would cost more to bring the timber to market than it is worth.

The increase of population may create a demand for a product, and thus make the land from which it is obtained more productive. The great natural pastures of Australia have for many years supported immense flocks of sheep. In England the carcase of a sheep is far more valuable than its wool; but the reverse was the case in Australia—the wool was valuable, the carcase was almost worthless. Wool is not a bulky commodity, and the cost of sending a fleece from Australia to England is comparatively trifling; but so great a quantity of meat was almost worthless to so sparse a population. The gold discoveries at once caused the population of Australia to be largely increased; the mutton which had been before wasted was now required; the sheep became much more valuable; and the pastures upon which the sheep graze thus became far more productive of wealth, although the fertility of these pastures has remained unchanged.

The productiveness of labour.If the productiveness of labour is estimated by the amount of wealth which is produced by a certain quantity of labour, then the productiveness of labour is partly the cause and partly the effect of the fertility of the land. "Quantity of labour" may be conveniently defined by the labour of a certain number of men working for a certain number of hours per day. The amount It is affected by the fertility of land,of wealth which is produced depends jointly upon the productiveness of land and the productiveness of the labour employed; but as remarks have already been made upon the productiveness of land, we shall now proceed to consider some of the causes upon which, under any assumed set of circumstances, depends the productiveness of labour.

by national character.Energy and intelligence are two of the most valuable qualities which a labourer can possess. It does not, as has been previously observed, appertain to our subject to attempt a full explanation of the causes which determine differences of national character. The Irish labourer, for instance, does not possess that steadiness and dogged determination which distinguish the English labourer. Lord Brassey's book, called Work and Wages, gives many striking examples of the different industrial qualities possessed by workmen of different nations. by the increase of capital.He gives the palm to the English labourer; and states that although wages are higher in this country than in any other European country, yet bridges, viaducts, tunnels, and all engineering works, can be executed at a cheaper rate in England than in any other country in the world.

and by the education of the labourers.Labourers have generally been so imperfectly educated that the economic advantage of intelligence to the labourer has been, and is still, most inadequately appreciated. Almost every industrial operation will be better and more expeditiously effected by the intelligent workman. The agricultural labourer is very generally looked upon as requiring no special skill or intelligence; but an experienced English land-agent has stated that in his opinion the reason why the land in the Lothians lets at a higher rent than equally fertile land in England, is that the Scotch labourers and farmers are, as a general rule, better educated and consequently more intelligent than labourers and farmers in England. This opinion has been confirmed by a large landowner and practical agriculturist, the late Marquis of Aylesbury, who in a speech to his tenantry, in November 1874, said that he found that the farms that were the best cultivated were in those counties where wages were the highest, and he attributed this to the circumstance that in these counties there were better and more skilled workmen. If therefore the English agricultural labourer becomes properly educated, it may be found that the productiveness of the land is as much increased as if an important addition had been made to its natural fertility. Education also produces a most decided improvement in the moral character of the workman. If workmen are dishonest, the loss which is incurred is in no way represented by the amount of property which may be stolen; if reliance cannot be placed upon labourers, they must be superintended and watched, and thus their labour is rendered less productive, because a certain portion of the wealth which is produced has to be paid to overlookers and others who would not be required to watch the labourer if complete confidence could be reposed in him. Thus if one overlooker is required to superintend the labour of twenty men, and if he is paid, as he probably is, twice as high wages as the ordinary workman, it is obvious that the amount paid in labour for the production of a certain commodity is just one-tenth more than it would be, if it were not necessary to employ the overlooker. If therefore his services were dispensed with, the productiveness of labour would be increased; and this would render it possible either to cheapen the commodity to the consumer, or to make an addition to the profits of the employer and the wages of the labourer. The productiveness of labour depends upon a great variety of other personal qualities possessed by the labourer. Intemperance, for instance, makes a labourer less able to do his work, and his labour is sure to be more irregular.

The productiveness of capital.The productiveness of capital may be estimated by the amount of wealth which is produced by the application of a certain quantity of capital. Capital is, of course, capable of producing more wealth when it employs efficient labour and is applied to fertile land; but there are certain circumstances which tend to make capital more productive, whether the land and labour are good or bad. It is affected by improvement of industrial processes;Every improvement in any of the processes of industry makes capital more productive. Without the assistance of the steam-engine, the capital at the present time existing in the country would not suffice for the production of more than a small portion of the wealth which is now annually produced. Machinery causes a greater quantity of wealth to be created with the assistance of a smaller amount of labour and capital. But the productiveness of capital is popularly estimated according to a different standard; for capital is conceived to be productive when the profits obtained by the capitalist are large. For instance, a farmer previous to the present period of agricultural depression, might have said:—It is true that in consequence of the advance in agricultural science more produce is grown upon a farm now than a few years since; but the rents which the farmers pay have increased; and therefore the profits of the farmer are not larger now than formerly. His capital, therefore, gave him no greater return, and he might for these reasons have considered that the productiveness of capital had not increased. This, no doubt, might have been the case, as far as the farmer himself was concerned; but the productiveness of capital depends upon the amount of wealth produced, and not upon the particular manner in which this wealth may be distributed amongst the different parties who have a claim to be remunerated. The laws which determine the relative value of the remuneration received by landlords, capitalists, and labourers, will be explained in those chapters which treat of the distribution of wealth.

Hitherto, the great social and economic importance of securing the greatest efficiency of labour, by giving the labourer some pecuniary interest in the work in which he is employed, has been most imperfectly understood. The relations between employers and employed will never become satisfactory until they are more united by the bonds of mutual interest. Too many of our labourers pass a life of hopeless drudgery; they in no way share their master's prosperity. In some of the succeeding chapters of this work, the great advantages of co-partnership and cooperation will be shown; for it will be explained that under such systems not only has the labourer been socially and morally improved, but capital and labour have in this way been rendered more productive, by calling forth the highest and most skilled efforts of the labourer. Improved relations between employers and employed might render unnecessary a great proportion of the present large outlay upon wages of superintendence, which, as above explained, so seriously diminish the productiveness both of labour and capital.

As yet only the general causes on which the productiveness of land, labour, and capital depend have been mentioned. Some of the more special means by which the efficiency of the three agents of production may be increased must now be considered. As a first example we will refer to the striking illustrations employed by Adam Smith, which demonstrate the advantages derived from the division of labour. A pin passes through about eighteen processes. Division of labour increases its efficiency,The metal has to be drawn into wire, the wire has to be cut a proper length, the end sharpened, the head must be made and fastened to the pin, the pin must be burnished and then properly packed. The most skilled workman could not make more than twenty pins per day if he had himself to attend to all the processes through which the pin passes. But when the labour of pin-making is divided, the various processes being performed by different workmen, ten workmen will make 50,000 pins in a day. Without division of labour the ten workmen would only make 200 pins per day, and thus it would appear that in this case a proper division of labour increases its productiveness more than two hundredfold. Other examples, even more striking than the one just quoted, might be readily selected. M. Say says that, in the manufacture of playing cards, there are seventy-two distinct operations. When these operations are appropriated to different workmen, 15,500 cards have been made in a day by thirty workmen; but if a single workman had to perform all the operations himself, he would not make more than one or two cards per day. The increased efficiency which is thus conferred upon labour is, according to Adam Smith, due to three causes:

for three reasons.1. The increase of dexterity in every particular workman.

2. The saving of the time which is commonly lost in passing from one species of work to another.

3. The invention of a great number of machines which facilitate and abridge labour, and enable one man to do the work of many.

The dexterity of the workman is increased.The greatest influence no doubt is produced by the first of these causes, namely, the increase of dexterity of the workman. The effect of continuous practice in performing both mental and physical operations is most strikingly exhibited in the increased quickness obtained. By practice the eye and hand may learn to work in perfect unison, and the hand and eye are made to obey with intuitive quickness the behests of the will. The glass-blower appears to give a casual glance at a decanter, wishing to make one like it. He places some molten glass upon his blow-pipe, and after a few minutes of blowing and twisting a decanter is made, and between it and its model the nicest eye can detect no difference in size or shape; yet science can scarcely analyse or explain the marvels of this extraordinary handiwork. No rule but the eye has been employed to measure, the eye looks at the decanter, and the hand is thus directed. The shape of the decanter is produced by a combination of different forces, which the most refined analysis of the mathematician could scarcely investigate; there is the force of expansion caused by the blowing, and centrifugal and other forces are brought into action by the twirling and twisting. Many of the operations of industry need a dexterity which can only be acquired in childhood; the pliant fingers of youth must be moulded to the work. When, therefore, the distinct operations of any industry are performed by different workmen, then each of these operations may become a separate trade, for which men may be separately trained. If all the processes of pin-making were performed by one man, he would not have sufficient practice to acquire the requisite dexterity in any single operation, and, therefore, if there was no division of labour in pin-making, all the labour employed must be, comparatively speaking, unskilled, and consequently very inefficient. The precision and quickness acquired by practice are not in any way confined to the mechanical operations of trade. What can be more extraordinary than the precision and quickness of the accomplished and practised musician? If the theory of violin-playing is explained, it seems to require a skill beyond the reach of man. The fingers appear to move with careless rapidity over the strings, yet the accuracy of each note depends upon the string being touched with the strictest correctness at some particular point.

Another advantage results from the dexterity of the superior workman, for he will use all the materials employed with the greatest possible economy; nothing is wasted by his blunders or mistakes.

The, time of passing from one operation to another is saved;Later writers on political economy, and amongst them, in particular, Mr. Mill, consider that too much importance has been attributed to the second of the three causes which, according to Adam Smith, explain the increased efficiency of labour when the distinct operations of industry are properly apportioned amongst the workmen employed. A great deal of time is undoubtedly wasted if a workman has often to pass from one species of work to another, and this waste is of course obviated when a labourer can steadily keep throughout the day at the same kind of work. although the advantage of this has been exaggerated. But Adam Smith exaggerates the nature and the amount of the advantages which may be thus secured, and omits to notice some counterbalancing disadvantages which may very possibly occur. Adam Smith says, "A man commonly saunters a little in turning his hand from one employment to another. When he first begins the new work he is seldom very keen and hearty; his mind, as they say, does not go to it, and for some time he rather trifles than applies to good purpose. The habit of sauntering and of indolent careless application which is naturally or rather necessarily acquired by every country workman, who is obliged to change his work and his tools every half-hour, and to apply his hand in twenty different ways almost every day of his life, renders him almost always slothful and lazy, and incapable of any vigorous application even on the most pressing occasions." There is nothing in this passage absolutely incorrect; it is, however, truth overstated. Each of the circumstances mentioned by Adam Smith produces some of the influence he describes; but his remarks would seem to prove that all those whose employments are various must be slothful and indolent, while the reverse is often the case; labourers frequently become quicker and more intelligent when the monotony of their employment is relieved by some variety. Waiters in large establishments are proverbially quick in their movements, and yet before they finish one thing they are often called upon to do a dozen different things. Gardeners are generally extremely intelligent, and yet there is the most constant variation in their employments. Before machinery was so largely used in agriculture as it is at the present time, the work of the agricultural labourer was far more monotonous. There are many labourers still living, who during twenty years of their life spent ten hours a day during ten months of the year in thrashing with the flail. Such a labourer might perhaps be somewhat stronger as a thrasher, but he passed his life as a machine, and it was impossible that an active intelligence should be preserved through such an ordeal.

The invention of machines is perhaps facilitated;The third advantage which arises from the division of labour, as enumerated by Adam Smith, is "the invention of a great number of machines which facilitate and abridge labour, and enable one man to do the work of many." There is some ambiguity in Adam Smith's conception of the causes which influence the invention of such machines. Returning to our original example, each of the workmen employed in pin-making has his attention concentrated upon some distinct operation of the manufacture, and it is therefore maintained that he will be more likely to suggest some improvement in the particular operation in which he is constantly engaged, than would another workman whose attention is distracted by a great number of the processes of pin-making. The supposition may be verified by some striking instances. The boy whose only employment consisted in opening and shutting the valve of a steam-engine invented a self-acting apparatus, which had not suggested itself to Watt and other accomplished mechanicians. but this is doubtful as a general principle.The spinning-jenny and the mule were invented by working men; but there is no general principle which regulates the invention of machines of industrial usefulness; many most important mechanical improvements have been suggested by those who perhaps for the first time may have watched the operations of a particular industry. Novelty has often been the prompter of an invention, and improvements in machinery have often, as it were, been forced upon a trade. The practical advantage of the steam thrashing machine was proved long before the farmers could be generally induced to use it. Routine has often so dulled the minds of those who are employed in some special industrial operation, that they are reluctant to understand that any improvement in the processes of a particular industry is required.

The invention of machines however, facilitates the division of of labour.Although division of labour may not be so entirely the cause of mechanical inventions as is sometimes supposed, yet there can be no doubt that a mechanical invention almost always induces a greater division of labour. When a machine is at work there are various operations performed by it which must be separately attended to. The machinery employed in a cotton-mill regulates the extent to which the division of labour is carried: for every process through which the cotton passes, from the time it is cleaned until it is woven into cloth, must be separately attended to, and thus, division of labour is enforced by the application of machinery. The introduction of new machinery may necessitate a much greater division of labour. Boat-building has not hitherto required any great division of labour. A most ingenious machine, however, has been invented by an American, Mr. Nathan Thompson, by which a boat may be completely built in a few hours. If boats are thus built, the nature of the machine will exactly determine to what extent division of labour will be henceforth practised in boat-building, for the distinct operations performed by the machine must be attended to by a certain number of workmen.

Another advantage of division of labour pointed out by Mr. Babbage, viz, classification of labourers.Mr. Babbage pointed out a most important advantage resulting from the division of labour which was altogether omitted by Adam Smith. Our former example will most clearly illustrate this advantage. The labourers who are employed in the various operations in pin-making receive wages which vary greatly. Boys can fasten on the heads of the pins with as much facility as men; girls can sort and pack the pins with great rapidity. Some of the other operations of pin-making, such as drawing the wire and pointing the ends, are performed by highly trained and very skilled labourers, and consequently the remuneration received varies from fourpence-halfpenny to four shillings per day; and in other branches of industry there are even greater differences than these. Mr. Babbage states that the various parts of which a watch is composed employ a hundred distinct trades, and the skill required in some of these trades is much greater than in others. A watch-case is, comparatively speaking, a simple article to make, whilst on the other hand, some of the parts on which the accuracy of a chronometer depends, must be so delicately adjusted that only very few workmen ever acquire the refined skill which is needed. These work-men therefore possess a virtual monopoly, and can obtain wages far exceeding any which are usually paid. If there were no division of labour in pin-making, each workman who made the pins must possess the skill which is required for each of the operations. He must be able to sharpen the pins, and the labour of a man who can sharpen pins is, as we have seen, worth four shillings per day. Economic advantage thus obtained.Without division of labour the work-man cannot spend his whole time in sharpening the ends of pins; he will have to devote a portion of his time to fastening on the heads of pins, and is then doing work which is only worth fourpence per day, thus incurring the most serious waste. Hence a workman would be compelled to produce what was worth only fourpence per day when his labour might produce what was worth four shillings per day. Mr. Babbage has attempted to form some estimate of the loss which would be thus incurred, for he has calculated "that even supposing a workman could make a pound of pins in the same time in which ten workmen combining their labour can make ten pounds, they would cost in making three times and three-quarters as much as they now do by means of the division of labour." A still greater loss would be incurred if the mechanician upon whose skill the accuracy of a chronometer depends had to waste his time, and perhaps destroy the delicacy of his touch, upon some of the rougher work by which parts of the watch are made. Labour is most efficient in the production of wealth when each individual can be employed upon work which is best suited to the skill and physical strength which he possesses. The perfection of modern manufacturing industry makes such a minute division of labour possible, that the labour which is performed can be so apportioned as to suit the capacity of each individual workman.

The division of labour is limited by the demand for the commodities produced.It has often been remarked that the demand for any particular commodity places a practical limit upon the extent to which division of labour in its manufacture can be carried. There are in this country few commodities in such a position. But to take a hypothetical case; let it be supposed that a pin manufactory is established in a new colony, the population of which is small. If there is such a division of labour that ten men are employed in the manufactory, there would be made, as has been before stated, fifty thousand pins in the course of a day. The colony might only have a demand for half of this number; and hence, if we suppose, for the sake of simplicity, that the colony has no export trade, there will be more pins made than are required. The pin manufactory might be closed during a portion of the year, in order that a smaller number of pins might be made. But in order to avoid the loss which is always incurred when a trade is carried on at intervals, the pin manufacturer would probably find it more to his advantage to employ a smaller number of men. If only five were now employed, there would not be so great a division of labour, and the labour of the five workmen would not be so efficient, for the number of pins now made in the course of the year would fall far short of one-half of the number previously made, although only double the quantity of labour was then employed. In England there are few things which are manufactured at an increased cost in consequence of the limited demand existing for them. If the stereoscope, for example, were only used as formerly for scientific purposes, and employed, like many other optical instruments, by professors to illustrate the laws of optics, a stereoscope would be far more expensive than it is now. The few which would then be purchased in the course of a year would be made, speaking comparatively, without any division of labour; it would not be worth while specially to apply any machinery to the construction of stereoscopes. But the stereoscope has now become a drawing-room toy, and tens of thousands are made every year. The price of stereoscopes has consequently been greatly reduced; so many are now manufactured, that workmen may be employed entirely in constructing them; and each part in a stereoscope may, like the various parts of a pin, be separately manufactured. All the advantages of division of labour can in this manner be secured; the dexterity of the workman is increased; machines, too, will be probably invented specially to facilitate some of the operations in the construction of the stereoscope, and these various operations can now be apportioned amongst workmen according to their skill and capacity. The practical result of this is strikingly exemplified in the fact that a stereoscope which now can be purchased for three shillings could not, a few years since, be obtained for less than a pound.

Combination of labour is as necessary as division of labour.The efficiency of labour as an agent of production depends as much upon the combination or cooperation of labour as upon its division. Labour may be combined in two different ways, and these have been described by Mr. Wakefield as simple and complex cooperation. When several workmen combine their labour in the same way to do the same thing, it is called by Mr. Wakefield simple cooperation; and its importance can be readily illustrated. Work has often to be done which requires the strength of a great number of men; a weight may have to be lifted which could not be lifted by any one man. Without such a cooperation of labour none of the works which mark the civilisation of a country could have been accomplished; for unless labourers united their strength and skill, bridges could not be built, railways could not be made, mines could not be dug, and buildings could not be erected. The assistance which labourers engaged in one employment lend to those in another was described by Mr. Wakefield as the complex cooperation of labour. He was the first who adequately explained the most important considerations which arise from such a combination of labour. Political economists, guided by the example of Adam Smith, had previously almost entirely confined their attention to a very subsidiary branch of the subject, namely, the division of labour. We have already indirectly remarked upon the great extent to which different employments combine to assist each other. Case of theThe manufacture of cotton cloth was mentioned as an example, to show how various are the different classes of labourers who assist in the production of even a simple commodity. manufacture of cotton cloth.We are led into endless ramifications in attempting to trace the different kinds of labour, either directly or indirectly brought into requisition, from the time that the cotton seed is planted in the swamps of Georgia until the cloth is woven in the looms of Manchester. There are distinct sets of labourers employed in tilling the cotton fields, in carrying the cotton to the port, in navigating the vessel in which it is shipped, in unloading the cotton at Liverpool, and then in transporting it to the mills of Manchester. All these different classes of labourers have been directly engaged in bringing the cotton to the place where it is wanted by the manufacturer. It would be vain to attempt a complete enumeration of all the different labourers who have indirectly assisted in bringing the cotton to market. There are the shipwrights who have built the ships, the labourers who have constructed the roads along which the cotton is carried, and the artisans who have made the tools with which the cotton fields are cultivated.

Bearing of the principle of combination of labour upon colonisation.There is, as it were, a tacit compact between each individual and society in general, that the commodities which he consumes will be produced for him by other classes of labourers. If there were not confidence that such a compact would be realised, society would return to its primitive type; for each man would have to live on his own plot of land, and every commodity which he consumed would have to be produced by himself. If this is done in any country to a large extent, the country must be poor and backward. Mr. Wakefield pointed out the important bearing of such considerations upon colonisation. The English Government had frequently encouraged a system of colonisation which tended to impoverish a colony, by impeding this complex cooperation of labour. In order to stimulate emigration, each family obtained from the Government a certain area of land in fee-simple, and thus a new colony was dotted over with the isolated settlements of a great number of distinct families, who lived so widely scattered that they could hold but slight intercourse with each other. Each family had, therefore, to produce for itself almost thing it required. Under these circumstances there could be little commerce or trade, and the country necessarily remained in almost a stationary condition. The people in one sense were not poor; for the virgin fertility of the soil supplied them abundantly with the ordinary necessaries of life; but there was an almost complete absence of cooperation of labour. One of these families might possess a superfluity of food: there might be some commodity which, in a particular situation, could be easily produced, yet it could not be exchanged for some other commodity which a family might particularly want, and which it might, perhaps, fail to obtain, even by the application of the greatest amount of labour. A colony in this condition derives scarcely any benefit from such great natural advantages as a genial climate, great mineral resources, and vast tracts of fertile land, as yet untilled and unappropriated. Therefore, Mr. Wakefield emphatically insists that a Government, when establishing a new colony, ought not to grant to emigrants settlements of land, far distant, and widely scattered, without at the same time taking steps to encourage the growth of a town population. The settlements which are granted by the Government ought to be concentrated as much as possible, and should, in the first place, be not too remote from the towns. There will then at once arise a cooperation between the industry of the town and the industry of the country. The industry of the town will supply the inhabitants of the country with the commodities which they found most difficult to obtain; and the town population will have an active demand for the food and other natural products which in the country can be raised in such plentiful abundance. The efficiency of labour will thus be greatly increased; for, with such an interchange of commodities, a family which could previously do little more than supply itself with food from a tract of land, can now not only obtain, with the same labour, all the food it requires, but can also purchase from the town population articles of utility and luxury before unattainable. Such a colony will rapidly advance in wealth; roads will be made, and other industrial appliances will be carried out, which will powerfully stimulate the rising commerce.

This principle exemplified in Australia.It was at first supposed that the gold discoveries in Australia would cripple its agriculture; that labour would be drawn from the farm to the gold mine; that the wages of agricultural labourers would greatly increase; and that under such difficulties agriculture must decline. But although this did in the first instance take place, yet agriculture speedily recovered in Australia, and has within the last few years rapidly advanced. The reason is that the gold discoveries caused the town population to be largely and suddenly increased, and the food which such a town population required was supplied from the agricultural districts. Those who sold the food could purchase, in return, all the products which the commerce of Europe provides; and Victoria has, in a few years, advanced from an aggregation of isolated settlements to the position of a prosperous country, with all the appliances of the oldest and most thriving commercial community. The large yield of gold since the gold discoveries is generally considered to be the source of the increased wealth of Australia. As Prof. Cairnes well remarked,^[1] the extent to which the gold discoveries have enriched Australia can be measured by the degree in which she has parted with this gold. In other words, she has been enriched, not by keeping it, but by sending it away in exchange for products from other countries. The gold may have been the primary stimulus of her prosperity; but the gold which has been produced most inadequately represents the extent to which her wealth has been augmented. Not only has all her labour, whether agricultural or not, been rendered more efficient by the increased cooperation of labour which is now practised there, in consequence of the growth of the town population; but even her land has been rendered far more productive of wealth, because, at an earlier period, much of the produce which was obtained from it, was not required, and therefore could not be accounted wealth.

Combination of labour requires good means of communication.There cannot be any extensive cooperation of labour between one employment and another, or between one district and another, unless the means of communication are good. Nothing, probably, has more contributed to perpetuate the poverty and backwardness of India than the want of good roads. There, it frequently happens that one district can scarcely lend any assistance to another; an interchange of commodities, which would be advantagous to all concerned, is often prevented by the want of a road. During the terrible famine which ravaged the North- West Provinces, in the year 1860, rice which was in one district at the famine price of four rupees per maund of 83 lbs., was selling in adjoining districts at less than two rupees per maund. As long as such occurrences can take place, India must continue poor, her resources must remain imperfectly developed, and her labour must be comparatively inefficient. A village community virtually isolated from the rest of India cannot now raise that produce for which their land is best adapted, but must cultivate it with a view of supplying themselves with the first necessaries of life.^[2] Manchester would, no doubt, annually purchase of India many million pounds' worth of cotton; but cotton will not be produced on any large scale until the people of India feel that if they grow cotton they will be able to exchange it for food and other necessaries.

The various functions of capital illustrate the same principle.The remarks which have been made to illustrate the functions of capital, afford striking examples of the complex cooperation of labour. An individual may save the fund which forms his capital from a great variety of sources. The wealth which he has thus saved, he will probably embark in a great number of different investments, and in this way assist the labour of those engaged in the production of various kinds of wealth. Part of his capital will probably be devoted to the trade in which he is engaged; and he will perhaps deposit the remainder with his banker, by whom it would be lent to numerous traders to support them in their business. All commerce, in fact, forcibly exemplifies the cooperation of labour, not only between different employments, but between different countries. England gathers wealth from every Arrangement of the subject.quarter of the world, but at the same time she equally enriches the countries with whom she trades.

In an earlier part of this chapter, we considered the increased efficiency given to labour, when the distinct operations of any industry are performed by separate sets of workmen. In this case, workmen who are differently employed combine to assist each other in the production of the same commodity, and hence division of labour is an instance of the complex cooperation of labour. We have therefore departed from scientific accuracy in our arrangement of this chapter, and, partly in deference to popular opinion, have given precedence in our remarks to a discussion of the advantages of division of labour. Political economists following in the steps of Adam Smith have restricted the subject of the division of labour to its narrow sense. The reason of this may perhaps be, that the illustrations used by Adam Smith have made the division of labour one of the most popular parts of political economy; and thus its importance, compared with other portions of the subject, has been greatly exaggerated.

1. Essays in Political Economy, Theoretical and Applied. by the late Prof. J. E. Cairnes.
2. [Since this was written the export of cotton from India has reached very large proportions. If raw and manufactured cotton are taken together they form by far the highest value of any article in her export table. In the year ending March 31, 1904, the value of cotton exported from India was in rupees: raw cotton, Rs. 17,43,46,372; manufactured cotton, Rs.ll,64,31,908.]