Another change, which has always hitherto characterized, and will assuredly continue to characterize, the progress of civilized society, is (2) a continual increase of the security of person and property. Of this increased security, one of the most unfailing effects is a great increase both of production and of accumulation. Industry and frugality can not exist where there is not a preponderant probability that those who labor and spare will be permitted to enjoy.
One of the changes which most infallibly attend the progress of modern society is, (3) an improvement in the business capacities of the general mass of mankind. I do not mean that the practical sagacity of an individual human being is greater than formerly. What is lost in the separate efficiency of each is far more than made up by the greater capacity of united action. Works of all sorts, impracticable to the savage or the half-civilized, are daily accomplished by civilized nations, not by any greatness of faculties in the actual agents, but through the fact that each is able to rely with certainty on the others for the portion of the work which they respectively undertake. The peculiar characteristic, in short, of civilized beings, is the capacity of co-operation; and this, like other faculties, tends to improve by practice, and becomes capable of assuming a constantly wider sphere of action.
[This progress affords] space and scope for an indefinite increase of capital and production, and for the increase of population which is its ordinary accompaniment. That the growth of population will overpass the increase of production, there is not much reason to apprehend. It is, however, quite possible that there might be a great progress in industrial [pg 477] improvement, and in the signs of what is commonly called national prosperity; a great increase of aggregate wealth, and even, in some respects, a better distribution of it; that not only the rich might grow richer, but many of the poor might grow rich, that the intermediate classes might become more numerous and powerful, and the means of enjoyable existence be more and more largely diffused, while yet the great class at the base of the whole might increase in numbers only, and not in comfort nor in cultivation. We must, therefore, in considering the effects of the progress of industry, admit as a supposition, however greatly we deprecate as a fact, an increase of population as long-continued, as indefinite, and possibly even as rapid, as the increase of production and accumulation.
§ 2. Tendency to a Decline of the Value and Cost of Production of all Commodities.
The changes which the progress of industry causes or presupposes in the circumstances of production are necessarily attended with changes in the values of commodities.
The permanent values of all things which are neither under a natural nor under an artificial monopoly depend, as we have seen, on their cost of production. (1.) But the increasing power which mankind are constantly acquiring over nature increases more and more the efficiency of human exertion, or, in other words, diminishes cost of production. All inventions by which a greater quantity of any commodity can be produced with the same labor, or the same quantity with less labor, or which abridge the process, so that the capital employed needs not be advanced for so long a time, lessen the cost of production of the commodity. As, however, value is relative, if inventions and improvements in production were made in all commodities, and all in the same degree, there would be no alteration in values.
As for prices, in these circumstances they would be affected or not, according as the improvements in production did or did not extend to the precious metals. If the materials of money were an exception to the general diminution of cost of production, the values of all other things would fall in relation to money—that is, there would be a fall of general [pg 478] prices throughout the world. But if money, like other things, and in the same degree as other things, were obtained in greater abundance and cheapness, prices would be no more affected than values would.
As regards the precious metals, it is to be said that since 1850 there has been a vast increase in their amount, and probably in greater proportion than the need arising from increased transactions. This is certainly true of silver; and it is admitted to be true of gold as late as about 1865. It has been asserted by Mr. Goschen that since then, especially since 1873, gold has not existed in a quantity that would permit it to keep its former proportions to commodities, and that it had appreciated. An appreciation, of course, would show itself in lower gold prices. On the other hand, gold has, as I think, not appreciated. Prices, even in the collapse of credit after the panic of 1873 down to 1879, were not quite so low as in 1845-1850, as is seen by the following table taken from the London “Economist”—2,200 indicating the price of a given number of articles in 1845-1850, as the basis of the table with which the prices of other years are compared:
| Year. | Index numbers. |
| 1845-1850 | 2,200 |
| 1857, July 1 | 2,996 |
| 1858, January 1 | 2,612 |
| 1865 | 3,575 |
| 1866 | 3,564 |
| 1867 | 3,024 |
| 1868 | 2,682 |
| 1869 | 2,666 |
| 1870 | 2,689 |
| 1871 | 2,590 |
| 1872 | 2,835 |
| 1873 | 2,947 |
| 1874 (Depression) | 2,891 |
| 1875 (Depression) | 2,778 |
| 1876 (Depression) | 2,711 |
| 1877 (Depression) | 2,723 |
| 1878 (Depression) | 2,529 |
| 1879 (Depression) | 2,202 |
| 1880 | 2,538 |
| 1881 | 2,376 |
| 1882 | 2,435 |
| 1883 | 2,343 |