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J. R. (John Ramsay) McCulloch.

A discourse on the rise, progress, peculiar objects, and importance, of political economy : containing an outline of a course of lectures on the principles and doctrines of that science online

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explained in two pamphlets of extraordinary me-
rit, published nearly at the same moment, by " A
Fellow of University College, Oxford," * and Mr
Malthus.f But the investigations of these gentle-
men, though of great importance, were compara-



* Essay on the Application of Capital to Land, by a Fellow
of University College, Oxford. (Mr West, a Barrister.)

f An Inquiry into the Nature and Progress of Rent, by
the Rev. T. R. Malthus.



POLITICAL ECONOMY* 69

lively limited in their object ; and it was reserved
for Mr Ricardo to carry his researches into every
department of the science, to correct errors sanc-
tioned by the highest authority, and to elucidate and
establish many hitherto undiscovered, and most
important principles. The appearance of his
work on the " Principles of Political Economy
and Taxation," in 1817, forms a new and memor-
able era in the history of the science. Exclusive of
many admirable correlative discussions, Mr Ricardo
has here analyzed the principles which determine the
exchangeable value of commodities, and has given
a full view of the science of the distribution of
wealth. The powers of mind displayed in these
investigations, the dexterity with which the most
abtruse and difficult questions are unravelled,
the unerring sagacity with which the operation of
general and fixed principles is investigated, the
skill with which they are separated and disentangled
from such as are of a secondary and accidental na-
ture, and the penetration with which their re-
motest consequences are perceived and estimated,
have never been surpassed ; and will for ever secure
the name of Ricardo a high and conspicuous place
in the list of those who have done most to un-
fold the complex mechanism of society, and to carry
this science to perfection.

The fundamental principle maintained by Mr
Ricardo in this great work is, that the exchange-



70 DISCOURSE ON

able value, or relative worth of commodities, as
compared with each other, depends exclusively on
the quantities of labour necessarily required to
produce them* Dr Smith was of opinion, that
this was the principle which determined the ex-
changeable value of commodities in the earliest
stages of society, before land had been appropriated
and capital accumulated ; but he supposed that,
after land had become property, and rent began to
be paid, and after capital had been amassed, and
workmen began to be hired by capitalists, the va-
lue of commodities would necessarily fluctuate,
not only according to the variations in the quantity
of labour required to produce and bring them to
market, but also according to the rise and fall of



* Sir William Petty had stated, so early as 1667, that the
value of commodities is always regulated by the quan-
tity of labour required to produce them. " If,'' says he,
" a man bring to London an ounce of silver out of the
earth in Peru, in the same time that he can produce a
bushel of corn, the one is the natural price of the other ;
notv, if, by reason of nerv and more easie mines, a man can
get two ounces of silver as easily as formerly lie did one,
then corn will be as cheap at ten shillings the bushel as it was be-
fore at Jive shillings, center is paribus." ( Treatise of Taxes and
Contributions, ed. 1679, p. 31.) This is a remarkable state-
ment ; but there is the same difference between it and the ana-
lysis and investigations of Mr Ricardo, that there is between
the conjectures of Pythagoras respecting the true system of
the world and the demonstrations of Newton.



11



POLITICAL ECONOMY. 71

rents and wages. But Mr Ricardo has shown that
Dr Smith erred in making this distinction ; and
that the same principle which determines the va-
lue of commodities in the earliest and rudest stages
of society, continues to determine it in those that
are most cultivated and refined. In establishing
this novel and most important doctrine, Mr Ri-
cardo derived considerable assistance from the pre-
vious inquiries of Mr Malthus and Mr West on the
subject of rent ; but he had no precursor on the far
more difficult and complicated inquiries respecting
the effects of the accumulation of capital, and of
fluctuations in the rate of wages on value. Inas-
much, however, as the merest outline of the analysis
and reasonings of Mr Ricardo, in the prosecution
of these inquiries, would far exceed my present li-
mits, I can do no more than state their results,
which may be thus summed up 1st, That rent is
altogether extrinsic ta the cost of production ; 2d,
That capital being the produce of previous labour,
and having no value except what it derives from
that labour, the fact of the value of the commo-
dities produced by its agency being always deter-
mined by the quantities of capital laid out or wast-
ed in their production, shows that it is really deter-
mined by the quantities of labour bestowed on
them ; and 3d, That a rise of wages occasions a
fall of profits , and not a rise in the price of com-



DISCOURSE ON

modi ties, and a fall of wages a rise of profits* and
not a fall of prices.

These conclusions are all of the last degree of
importance ; and by establishing them, Mr Ricar-
do gave a new aspect to the whole science. But
these form a part only of the truths brought to
light in his work. Having ascertained that pro-
fits vary inversely as wages, Mr Ricardo applied
himself to discover the circumstances which deter-
mine the rate of wages, and which consequently
determine profits. These he found to depend on
the cost of producing the articles required for the
consumption of the labourer. However high the
price of such articles may rise, the labourer, it is
plain, must always receive such a supply of them as
is sufficient to enable him to exist, and continue
his race. And, as raw produce must ever form a
principal part of the subsistence of the labourer,
and as its price has a constant tendency to rise, be-
cause of the constantly increasing sterility of the
soils to which recourse must be had in advancing
societies,* it follows that wages must also have a



* The rise in the price of raw produce, occasioned by the
decreasing fertility of the soils to which every advancing
society must resort, was, I believe, first distinctly shown in
a work, in which there are many just and ingenious, inter-
mixed with many fanciful and erroneous views, entitled,
Principes de tout Gotivernement, in two vols. 12mo, published



POLITICAL ECONOMY. 73

constant tendency to rise, and profits to fall, with
the increase of wealth and population. That such
a fall of profits invariably takes place in the pro-
gress of society, is a fact of which there neither
is nor can be any doubt. It had, however, been
universally supposed that this fall was a consequence
of the increase of capital, or rather of the increased
competition of its possessors, or of their efforts to
undersell each other. But Mr Ricardo has shown
the fallacy of this opinion ; and has proved that all
permanent reductions in the rate of profit are a
consequence of an increase in the rate of wages,
caused by the greater cost of the raw produce ob-
tained from the poorer soils successively brought
under cultivation as population is augmented.

Such will be found to be the import of the lead-
ing doctrines promulgated by Mr Ricardo. In



in 1766. The author has, on one occasion, hit upon the
real origin of rent (c Quand les cultivateurs, devenus nom-
breux y " says he, " auront defriche toutes les bonnes terres ;
par leur augmentation successive, et par la continuity du de-
frichement, il se trouvera un point ou il sera plus avantageux
d un nouveau colon deprendre a ferme des terresfecondes, que
d"en dejricher de nouvelles beaucoup mains bonnes." (Tome
I. p. 126.) It is plain, however, from his not reverting to the
subject, that he was not at all aware of the importance of
the principle he had stated ; and it is apparent, indeed, from
other passages of the work, that he supposed rent entered
into price.



74 DISCOURSE ON

establishing them he has made a very great addi-
tion to the mass of useful and universally inter-
esting truths ; and has exhibited some of the
finest examples to be met with of discriminating
analysis and profound and refined discussion.
His doctrines are not, as has sometimes been
stated, merely speculative. On the contrary, they
enter deeply into almost all the investigations of
the science. That part of Mr Ricardo's work, in
which he applies his principles to discover the real
incidence and effect of taxes on rent, profit, wages,
and raw produce, is altogether practical ; and must
always be a subject of careful study to those who
wish to render themselves thoroughly acquainted
with this great department of economical science.

The brevity with which Mr Ricardo has stated
some of his most important propositions, the few-
ness of his illustrations, and the mathematical cast
he has given to his reasoning, render it somewhat
difficult for readers, unaccustomed to such inves-
tigations, readily to follow him. Those, however,
who give to his works the attention of which they
are so worthy, will find them to be no less logical
and instructive than they are profound and im-
portant. It was the opinion of Quintilian, that
the students of eloquence who were highly delight-
ed with Cicero had made no inconsiderable pro-
gress in their art j and the same may without hesi-
tation be said of the students of Political Economy



POLITICAL ECONOMY. 7 5

who find pleasure in the works of Mr Ricardo.
Sciat se non parum profecisse cui RICARDO valde
placebit.

The study of Mr Ricardo 's work, and of the
science in general, has been much facilitated by
the labours of late writers. ' Without touching on
any of the difficult or controverted points, Mrs
Marcet has, in her " Conversations on Political
Economy " illustrated and explained the element-
ary and leading principles, established by Dr
Smith, Mr Ricardo, and others, with singular skill
and perspicuity, and in such a way as cannot fail,
while it facilitates the progress of the student, to
interest him in the science, and to excite his at-
tention. Mr Mill's " Elements of Political Eco-
nomy" is a work of a higher order ; and is, perhaps,
better calculated for the use of those who are
considerably advanced in the science than of be-
ginners. Mr Mill touches on almost every topic
of discussion : He has disentangled and simplified
the most complex and difficult questions ; has
placed the various principles which compose the
science in their natural order ; and has shown their
connection with and dependence on each other.
Mr Mill's object being only to give a strictly logi-
cal deduction of the principles of Political Eco-
nomy, he has not attempted to illustrate his doc-
trines by references either to past or present cir-
cumstances or institutions ; and though his work



76 DISCOURSE ON

may on that account be less generally interesting,
it is so much the better calculated to fix the con-
nection of the great truths of the science in the
mind of those who have already studied them in
detail.



The science of Political Economy was long con-
founded with that of Politics ; and it is undoubt-
edly true that they are very intimately connected,
and that it is frequently impossible to treat those
questions which strictly belong to the one with-
out referring more or less to the principles and
conclusions of the other. But, in their leading
features, they are sufficiently distinct. The laws
which regulate the production and distribution
of wealth are the same in every country and
stage of society. Those circumstances which are
favourable or unfavourable to the increase of
riches and population in a republic may equally
exist, and will have exactly the same effects, in a
monarchy. That security of property, without
which there can be no steady and continued exer-
tion that freedom of engaging in every different
branch of industry, so necessary to call the various
powers and resources of human talent and ingenuity
into action and that economy in the public ex-
penditure, so conducive to the accumulation of na-
tional wealth are not the exclusive attributes of



POLITICAL ECONOMY. 77

any particular species of government If free states
generally make the most rapid advances in wealth
and population, it is an indirect rather than a di-
rect consequence of their political constitution.
It results more from the greater probability that
the right of property will be held sacred that the
freedom of industry will be less fettered and re-
stricted, and that the public income will be more
judiciously levied and expended under a popular
government, than from the mere circumstance
of a greater proportion of the people being per-
mitted to exercise political rights and privileges.
Give the same securities to the subjects of an ab-
solute monarch, and they will make the same ad-
vances. Industry does not require to be stimulat-
ed by extrinsic advantages. The additional com-
forts and enjoyments which it procures have al-
ways been found sufficient to ensure the most per-
severing and successful exertions. And whatever
may have been the form of government, those
countries have always advanced in the career of
improvement, in which the public burdens have
been moderate, the freedom of industry permitted,
and every individual enabled peaceably to enjoy the
fruits of his labour. It is not, therefore, so much
on its political organization, as on the talents and
spirit of its rulers, that the wealth of a country is
principally dependent. Economy, moderation, and
intelligence on the part of those in power, have



78 DISCOURSE ON

frequently elevated absolute monarchies to a very
high degree of opulence and of prosperity ; while,
on the other hand, all the advantages derived from
a more liberal system of government have not been
able to preserve free states from being impoverish-
ed and exhausted by the extravagance, intolerance,
and short-sighted policy of their rulers.

The sciences of Politics and of Political Econo-
my are, therefore, sufficiently distinct. The poli-
tician examines the principles on which govern-
ment is founded ; he endeavours to determine in
whose hands the supreme authority may be most
advantageously placed ; and unfolds the reciprocal
duties and obligations of the governing and govern-
ed portions of society. The political economist
does not take so high a flight. It is not of the
constitution of the government, but of its ACTS on-
ly, that he is called upon to judge. Whatever mea-
sures affect the production or distribution of wealth,
necessarily come within the scope of his observation,
and are freely convassed by him. He examines whe-
ther they are in unison with the just principles of eco-
nomical science. If they are, he pronounces them
to be advantageous, and shows the nature and ex-
tent of the benefits of which they will be produc-
tive ; if they are not, he shows in what respect
they are defective, and to what extent their opera-
tion will be injurious. But he does this without
inquiring into the constitution of the government



POLITICAL ECONOMY. 79

by which these measures have been adopted. The
circumstance of their having emanated from the
privy council of an arbitrary monarch, or the repre-
sentative assembly of a free state, though in other
respects of supreme importance, cannot affect the
immutable principles by which the economist is to
form his opinion upon them.

Besides being confounded with Politics, Poli-
tical Economy has sometimes been confounded
with Statistics ; but they are still more easily se-
parated and distinguished. The object of the
statistician is to describe the condition of a par-
ticular country at a particular period ; while the
object of the political economist is to discover the
causes which have brought it into that condition,
and the means by which its wealth and riches may
be indefinitely increased. He is to the statistician
what the physical astronomer is to the mere ob-
server. He takes the facts furnished by the re-
searches of the statistician, and after comparing
them with those furnished by historians and travel-
lers, he applies himself to discover their relation.
By a patient induction by carefully observing the
circumstances attending the operation of particular
principles, he discovers the effects of which they
are really productive, and how far they are liable
to be modified by the operation of other principles.
It is thus that the relation between rent and pro-
fit between profit and wages, and the various ge-



80 DISCOURSE ON

neral laws which regulate and connect the appa-
rently conflicting, but really harmonious interests of
every different order in society, have been discover-
ed, and established with all the certainty of demon-
strative evidence.



Such is the peculiar situation of this country,
that economical questions must long continue to
occupy a very prominent place in almost every dis-
cussion on public affairs, both in and out of Parlia-
ment. Some of these questions are as refined and
delicate as they are intimately and closely con-
nected with the public interests. And it is the
duty of all who do not voluntarily choose to relin-
quish the noblest and most valuable privilege en-
joyed by the citizens of a free state that of ex-
pressing their opinion on the conduct of public af-
fairs to qualify themselves for its proper exer-
cise. Neither must it be supposed, that it is pos-
sible for any one to prepare himself for the dis-
cussion of a particular branch of Political Eco-
nomy, without being previously well acquainted
with its general and fundamental principles. There
is no short road no via regia to conduct the
student to it$ results, any more than to those of
mathematics. It is not a science in which it is
practicable to jump to conclusions. It has no one
insulated point. Its truths all partake of one com-



POLITICAL ECONOMY. 81

raon essence ; they are all deduced from the same
fundamental principles; and necessarily depend
upon and grow out of each other. An over anxie-
ty to grasp at its ultimate results and practical con-
clusions, is the natural and common error of those
who are beginningthe study; and it isone that ought
to be most particularly guarded against ; for it is
abundantly certain, that those who are not thorough-
ly conversant with the principles of the science, and
with their connection and relation, will never be
able to form even a probable conjecture as to the
effects of any new measure, or to distinguish be-
tween the truth or falsehood of any new opinion or
theory.

It is almost unnecessary to say how indispensable
it is, to the ends of good government, that Legis-
lators should be well instructed in this science.
Hcec cognitio ad viros civile s proprie special. la
financial and commercial legislation, it is impossible
to make a single false step, to impose a single in-
judicious tax or restriction, without materially a
fecting the interests of every individual, and actually
endangering the subsistence of many families. Rec-
titude of purpose affords no security against error.
The want of acquaintance with sound scientific
principles, has often frustrated the best intentions ;
and has rendered measures intended to hasten the
progress of improvement productive only of disas*
ter and disgrace.



82 DISCOURSE Otf

The principles of Political Economy really form
the " LEGES LEGUM, ex quibus" to use the expres-
sive language of Lord Bacon, " inform atio peti
possit, quid in singulis legihus hene aut perperam
positum aut constitutum sit.' 9 The destiny of a na-
tion, governed by ministers ignorant of this science,
is made wholly to depend on accident or caprice.
They may adopt a good system of policy, or they
may adopt a bad one : If they adopt a good sys-
tem, being ignorant of the cause of the prosperity
and happiness that will result from it, they can have
nothing, better than official routine, to induce them
steadily to persevere in the course on which they
have fortuitously entered. And if, on the other
hand, they adopt a bad system, they will be equally
ignorant of the cause of the misery it must infalli-
bly occasion, and consequently of the means of es-
caping it.

It is a profound and intimate, not a superfi-
cial and general, knowledge of the just principles
and conclusions of economical science, that can
alone enable the statesman to appreciate the bear-
ings and effect of different institutions and mea-
sures, and consequently to adopt those that are most
for the national advantage. A person maybe able
to declaim with spirit and eloquence on the advan-
tages of free trade, and unrestricted competition
in all the departments of industry, and yet be
miserably ignorant of many fundamental and most



POLITICAL ECONOMY. 83

important principles. It is a vulgar error to
suppose that these principles all lie on the sur-
face : many of them eluded the observation of
Quesnay and Smith ; and these, we may be as-
sured, are not to be understood without serious
study and patient attention. Neither is there so
much as the shadow of a foundation for supposing,
as is sometimes done, that the new doctrines respect-
ing value, rent, profits, &c. though extremely well
fitted to exercise the ingenuity of speculative men,
are foreign from the business of real life, and
do not lead to any useful practical conclusion.
Without being acquainted with the principles
which determine exchangeable value, it is im-
possible ever to form a clear conception of the
effect of fluctuations in the rate of wages on
prices and profits ; and without being acquainted
with the laws which govern rent and wages, it will
be found to be equally impossible to determine the
real incidence of any tax, or to arrive at any sound
conclusion in the questions that are every day
arising in commercial and financial legislation.

How wide a range of scientific principle is ne-
cessary to the proper discussion of the restrictions
on the corn trade ! No one, indeed, who is in-
structed in the elementary doctrines with respect
to commerce, can hesitate about laying it down
broadly, that the national wealth will be more effec-
tually promoted, by permitting corn, like any other



DISCOURSE ON

commodity, to be bought wherever it can be had
for the least price. But if you wish to ascertain the
actual effect of the restriction on importation on
the rate of wages and of profits or to know how
much of the increased price of corn which it oc-
casions goes into the pockets of the landlords, and
how much is absolutely lost, you must call to your
aid all the principles of the science.

It has frequently been argued, that though the
study of Political Economy be essentially necessary
to Legislators, and to individuals of rank and for-
tune, it can be of comparatively little use to those
in the middle and lower walks of life. But this
poor apology for ignorance is entirely founded on
a most mistaken and fallacious idea. The great
and increasing influence of public opinion an in-
fluence which gives an impress to all the acts of
government, and to which, when firmly and deli-
berately expressed, the proudest minister must con-
sent to bow, renders it of the utmost importance
that the public should be well informed on all
matters affecting the best interests of the state.
So long, however, as the bulk of the people are
unacquainted with the elementary doctrines and
conclusions of this science, so long must they con-
tinue wholly ignorant of the principal causes of
national wealth and national poverty, and, conse-
quently, of the circumstances which really deter-
mine their condition in life. A people thus unin-



POLITICAL ECONOMY. 85

structed must, if they express any opinion on pub-
lic affairs, necessarily express one that has been
taken up blindly and capriciously. The judg-
ments of such as are ignorant of principle can be
dictated only by prejudice ; and having no means
of distinguishing between the immediate and tran-
sitory and the ultimate and lasting effects of any
measure, they become the ready and unsuspecting
dupes of the shallowest artifices. If those who
have not endeavoured to inform themselves respect-
ing the circumstances which determine the various
degrees of national happiness and prosperity were
to remain mere passive spectators of events, their
want of information would not be so extremely
pernicious. But ignorance is not more blind than
presumptuous. Those who are least qualified for


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Online LibraryJ. R. (John Ramsay) McCullochA discourse on the rise, progress, peculiar objects, and importance, of political economy : containing an outline of a course of lectures on the principles and doctrines of that science → online text (page 5 of 8)