Accumulation—Productive and unproductive consumption—Use of capital—Credit—Security of property—Production applied to the satisfaction of common wants—Increase of comforts—Relations of capitalist and labourer.
Dr. William Bulleyn, who lived three centuries ago, first gave currency to the saying, that great riches were "like muckhills, a burthen to the land, and offensive to the inhabitants thereof, till their heaps are cast abroad, to the profit of many." The worthy physician belonged to an age when the class called misers extensively prevailed; and when those who lent out money upon interest were denominated usurers. They were generally objects of public obloquy, and their function was not understood. There are plenty of men still amongst us who, in Dr. Bulleyn's view of the matter, are impersonations of the muck that is not spread. The muck-spreaders, according to the old notion, were those whose consumption was always endeavouring to outstrip the production that was going forward around them. The latter is by far the larger class at the present day; the former, the more powerful.
Let us endeavour, somewhat more with reference to practical results than we have already attempted, to look at some of the general principles existing in modern society which determine the existence, and regulate the employment, of capital.
Whatever is saved and accumulated is a saving and accumulation of commodities which have been produced. The value of the accumulation is most conveniently expressed by an equivalent in money; but only a very small part of the accumulation is actually money. A few millions of bullion are sufficient to carry on the transactions of this country. Its accumulations, or capital, which have been considered to amount to twenty-two hundred million pounds sterling, could not be purchased by several times the amount of all the bullion that exists in the world. A great part of what is saved, therefore, is an accumulation of products suitable for consumption. The moment that they are applied to the encouragement of production, they begin to be consumed. They encourage production only as far as they enable the producers to consume while they are in the act of producing. Accumulation, therefore, is no hindrance to consumption. It encourages consumption as much as expenditure of revenue unaccompanied by accumulation. It enables the things consumed to be replaced, instead of being utterly destroyed.
Whatever is consumed by those who are carrying forward the business of production has been called productive consumption. Whatever, on the other hand, is consumed by those who are not engaged in re-producing, has been called unproductive consumption. The difference may be thus illustrated:—A shoemaker, we will say, rents a shop, works up leather and other materials, uses various tools, burns out candles, and is himself fed and clothed while in the act of producing a pair of shoes. This is productive consumption;—for the pair of shoes represents the value of the materials employed in them, the commodities consumed by the shoemaker during their production, and the wear and tear of the tools applied in making them. If the shoes represent a higher value than what has been consumed, in consequence of the productiveness of the labour of the shoemaker, the difference is net produce, which may be saved, and, with other savings, become capital. But further:—The shoemaker, we will suppose, accumulates profits sufficient to enable him to live without making shoes, or applying himself to any other branch of industry. He now uses no materials, he employs no tools, but he consumes for the support and enjoyment of existence, without adding anything to the gross produce of society; this is called unproductive consumption.
The differences, however, between productive and unproductive consumption admit of considerable qualification. We have already described the course of a spendthrift, and of a man of fortune who lives virtuously and economically.[33] Whatever may be the scientific definition, no one can say that these, even viewed from the industrial point, can be classed together as unproductive consumers. Productive consumption, according to the strict definition of the earlier economists, is consumption directly applied to the creation of some material product. But a new element was introduced into the question by Mr. Mill's definition—that labour and expenditure are also productive, "which, without having for their direct object the creation of any useful natural product, or bodily or mental faculty or quality, yet lead indirectly to promote one or other of those ends." On the other hand, unproductive consumption consists of labour and expenditure exerted or incurred "uselessly, or in pure waste, and yielding neither direct enjoyment nor permanent sources of enjoyment."
It has been suggested by Dr. Cooper, an American professor, that the parable of "the ten talents," in St. Matthew's Gospel, points to the employment of capital for future production. "For the kingdom of heaven is as a man travelling into a far country, who called his own servants, and delivered unto them his goods. And unto one he gave five talents, to another two, and to another one; to every man according to his several ability; and straightway took his journey. Then he that had received the five talents went and traded with the same, and made them other five talents. And likewise he that had received two, he also gained other two. But he that had received one, went and digged in the earth, and hid his lord's money." The last was the "wicked and slothful," because unprofitable, servant. His was the sin of omission. He ought to have put out the money to "the exchangers," even if he had been afraid to trade with it.
Adam Smith has laid it down as an axiom that the proprietor who encroaches upon his capital by extravagance and waste, is a positive destroyer of the funds destined for the employment of productive labour. No doubt this is, in many respects, true. He, also, has buried his "one talent." But the common opinion of what are called "the money-making classes" of our time goes somewhat further than this. It is said that, amongst "the middle class" of this country, "the life of a man who leaves no property or family provision, of his own acquiring, at his death, is felt to have been a failure."[34] There are many modes in which the life of an industrious, provident, and able man may have been far other than "a failure," even in a commercial point of view, when he leaves his family with no greater money inheritance than that with which he began the world himself. He may have preserved his family, during the years in which he has lived amongst them, in the highest point of efficiency for future production. He may have consumed to the full extent of his income, producing, but accumulating no money capital for reproductive consumption; and, indirectly, but not less certainly, he may have accumulated whilst he has consumed, so as to enable others to consume profitably. If he have had sons, whom he has trained to manhood, bestowing upon them a liberal education; bringing them up, by honest example, in all trustworthiness; and causing them to be diligently instructed in some calling which requires skill and experience—he is an accumulator. If he have had daughters, whom he has brought up in habits of order and frugality—apt for all domestic employments—instructed themselves, and capable of carrying forward the duties of instruction—he has reared those who in the honourable capacity of wife, mother, and mistress of a family, influence the industrial powers of the more direct labourers in no small degree; and, being the great promoters of all social dignity and happiness, create a noble and virtuous nation. By the capital thus spent in enabling his children to be valuable members of society, he has accumulated a fund out of his consumption which may be productive at a future day. He has postponed his money contribution to the general stock; but he has not withheld it altogether. He has not been "the wicked and slothful servant." On the other hand, many a man, whose life, according to the mere capitalist doctrine, has not been "a failure," and who has taught his family to attach only a money-value to every object of creation, bequeaths to the world successors whose rapacity, ignorance, unskilfulness, and improvidence, will be so many charges upon the capital of the nation. The "muckhill" will by them be "cast abroad," but it will be devoted to the mere pursuit of sensual indulgence, losing half its fertilizing power, and too often burning up the soil that its judicious application would stimulate. He that has been weak enough, according to this "middle-class" doctrine, not to believe that the whole business of man is to make "a muckhill," may have spent existence in labours, public or private, for the benefit of his fellow creatures; but his life is "a failure!" The greater part of the clergy, of the bar, of the medical profession, of the men of science and literature, of the defenders of their country, of the resident gentry, of the aristocracy, devote their minds to high duties, and some to heroic exertions, without being inordinately anxious to guard themselves against such "a failure." It would perhaps be well if some of those who believe that all virtue is to be resolved into pounds sterling, were to consider that society demands from "the money-making classes" a more than ordinary contribution—not to indiscriminate benevolence, but to those public instruments of production—educational institutions—improved sanitary arrangements—which are best calculated to diminish the interval between the very rich and the very poor.
Whatever tends to enlighten the great body of the people facilitates individual accumulation. A large portion of the productions of industry, especially amongst the humbler classes of the community, is wasted, in addition to that portion which is enjoyed. Every consumption that is saved by habits of order, by knowing the best way of setting about a thing, by economy in the use of materials, is so much saved of the national capital; and what is saved remains to give new encouragement to the labour of the producer, and to bestow an increase of comforts upon the consumer. Again, the more that professional skill of every sort is based upon real knowledge, the more productive will be the industry of every class of labourers. Above all, sound morals, and pure and simple tastes, are the best preservatives from wasteful expenditure, both in the rich, and in the poor; and he that limits his individual gratification to objects worthy of a rational being, has the best chance of acquiring a sufficiency for his wants, and of laying by something to provide a fund for that productive consumption by which the wants of others are supplied.
With these general remarks upon accumulation and consumption, let us proceed to consider some points connected with the application of capital.