FOOTNOTES:
[1] Reprinted by permission from The Quarterly Journal of Economics, Vol. XIII, July. 1899.
[2] Bonar, Philosophy and Political Economy, pp. 177, 178.
[3] "Every individual is continually exerting himself to find out the most advantageous employment for whatever capital he can command. It is his own advantage, and not that of the society, which he has in view. But the study of his own advantage naturally, or rather necessarily, leads him to prefer that employment which is most advantageous to the society.... By directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain; and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it." Wealth of Nations, Book IV, chap. ii.
[4] The discrepancy between the actual, causally determined situation and the divinely intended consummation is the metaphysical ground of all that inculcation of morality and enlightened policy that makes up so large a part of Adam Smith's work. The like, of course, holds true for all moralists and reformers who proceed on the assumption of a providential order.
[5] "In the political body, however, the wisdom of nature has fortunately made ample provision for remedying many of the bad effects of the folly and injustice of man; in the same manner as it has done in the natural body, for remedying those of his sloth and intemperance." Wealth of Nations, Book IV, chap. ix.
[6] E.g., "the real measure of the exchangeable value of all commodities." Wealth of Nations, Book I, chap, v, and repeatedly in the like connection.
[7] E.g., Book I, chap. vii: "When the price of any commodity is neither more nor less than what is sufficient to pay the rent of the land, the wages of the labor, and the profits of the stock employed in raising, preparing, and bringing it to market, according to their natural rates, the commodity is then sold for what may be called its natural price." "The actual price at which any commodity is commonly sold is called its market price. It may be either above, or below or exactly the same with its natural price."
[8] Lectures of Adam Smith (Ed. Cannan, 1896), p. 169.
[9] "This division of labor, from which so many advantages are derived, is not originally the effect of any human wisdom, which foresees and intends that general opulence to which it gives occasion. It is the necessary though very slow and gradual consequence of a certain propensity in human nature which has in view no such extensive utility,—the propensity to truck, barter, and exchange one thing for another. Whether this propensity be one of those original principles in human nature of which no further account can be given, or whether, as seems more probable, it be the necessary consequence of the faculties of reason and speech, it belongs not to our present subject to inquire." Wealth of Nations, Book I, chap. ii.
[10] Wealth of Nations, Book I, chaps, v.-vii.
[11] Wealth of Nations, Book I, chap. v.
[12] As, e.g., the entire discussion of the determination of Wages, Profits and Rent, in Book I, chaps, viii.-xi.
[13] "There is in every society or neighborhood an ordinary or average rate both of wages and profit in every different employment of labor and stock. This rate is naturally regulated, ... partly by the general circumstances of the society.... There is, likewise, in every society or neighborhood an ordinary or average rate of rent, which is regulated, too.... These ordinary or average rates may be called the natural rates of wages, profit, and rent, at the time and place in which they commonly prevail. When the price of any commodity is neither more nor less than what is sufficient to pay the rent of the land, the wages of the labor, and the profits of the stock employed in raising, preparing, and bringing it to market, according to their natural rates, the commodity is then sold for what may be called its natural price." Wealth of Nations, Book I, chap. vii.
[14] "Such commodities may continue for whole centuries together to be sold at this high price; and that part of it which resolves itself into the rent of land is, in this case, the part which is generally paid above its natural rate." Book I, chap. vii.
[15] Wealth of Nations, Book I, chap, vi; also chap. viii.
[16] For an instance of how these early phases of industrial development appear, when not seen in the light of Adam Smith's preconception, see, among others, Bücher, Entstchung der Volkswirtschaft.
[17] Book I, chap. iv.
[18] See Wealth of Nations, Book II, chap. v, "Of the Different Employment of Capitals."
[19] Wealth of Nations, Book I, chap. v. See also the plea for free trade, Book IV, chap. ii: "But the annual revenue of every society is always precisely equal to the exchangeable value of the whole annual produce of its industry, or, rather, is precisely the same thing with that exchangeable value."
[20] "The difference of natural talents in different men is in reality much less than we are aware of." Wealth of Nations, Book I, chap. ii.
[21] "Mit diesen philosophischen Ueberzeugungen tritt nun Adam Smith an die Welt der Enfahrung heran, und es ergiebt sich ihm die Richtigkeit der Principien. Der Reiz der Smith'schen Schriften beruht zum grossen Teile darauf, dass Smith die Principien in so innige Verbindung mit dem Thatsächlichen gebracht. Hie und da werden dann auch die Principien, was durch diese Verbindung veranlasst wird, an ihren Spitzen etwas abgeschliffen, ihre allzuscharfe Ausprägung dadurch vermieden. Nichtsdestoweniger aber bleiben sie stets die leitenden Grundgedanken." Richard Zeyss, Adam Smith und der Eigennutz (Tübingen, 1889), p. 110.
[22] See, e.g., Malthus and his Work, especially Book III, as also the chapter on Malthus in Philosophy and Political Economy, Book III, Modern Philosophy: Utilitarian Economics, chap. i, "Malthus."
[23] Ricardo is here taken as a utilitarian of the Benthamite color, although he cannot be classed as a disciple of Bentham. His hedonism is but the uncritically accepted metaphysics comprised in the common sense of his time, and his substantial coincidence with Bentham goes to show how well diffused the hedonist preconception was at the time.
[24] Cf. Bonar, Malthus and his Work, pp. 323-336.
[25] His work is an inquiry into "the Nature and Causes of the Wealth of Nations."
[26] "The annual labor of every nation is the fund which originally supplies it with all the necessaries and conveniences of life which it annually consumes, and which consist always either in the immediate produce of that labor or in what is purchased with that produce from other nations." Wealth of Nations, "Introduction and Plan," opening paragraph.
[27] "The produce of the earth—all that is derived from its surface by the united application of labor, machinery, and capital—is divided among three classes of the community.... To determine the laws which regulate this distribution, is the principal problem of political economy." Political Economy, Preface.
[28] In the introductory essay to his edition of Ricardo's Political Economy. See, e.g., paragraphs 9 and 24.
[29] Theories of Production and Distribution, 1776-1848.
[30] Entstehung der Volkswirtschaft (second edition). Cf. especially chaps. ii, iii, vi, and vii.
[31] "Even if we put aside all questions which involve a consideration of the effects of industrial institutions in modifying the habits and character of the classes of the community, ... that enough still remains to constitute a separate science, the mere enumeration of the chief terms of economics—wealth, value, exchange, credit, money, capital, and commodity—will suffice to show." Shirres, Analysis of the Ideas of Economics (London, 1893), pp. 8 and 9.
[32] "If a commodity were in no way useful, ... it would be destitute of exchangeable value; ... (but), possessing utility, commodities derive their exchangeable value from two sources," etc. Ricardo, Political Economy, chap, i, sect. I.
[33] Cf., for instance, Senior, Political Economy (London, 1872), particularly pp. 88, 89, and 130-135, where the wages of superintendence are, somewhat reluctantly, classed under profits; and the work of superintendence is thereupon conceived as being, immediately or remotely, an exercise of "abstinence" and a productive work. The illustration of the bill-broker is particularly apt. The like view of the wages of superintendence is an article of theory with more than one of the later descendants of the classical line.
[34] Cf. Böhm-Bawerk, Capital and Interest, Books II and IV, as well as the Introduction and chaps. iv and v of Book I. Böhm-Bawerk's discussion bears less immediately on the present point than the similarity of the terms employed would suggest.
[35] Political Economy, p. 87.
[36] Character and Logical Method of Political Economy (New York, 1875), p. 71. Cairnes may not be altogether representative of the high tide of classicism, but his characterisation of the science is none the less to the point.
[37] Senior, Political Economy, p. 87.