Chapter 9d: Foreign Economic systems
The political economy of modern European nations was more favourable to manufactures and foreign trade, the industry of the towns, than to agriculture, the industry of the countryside.
- Other nations were more favourable to agriculture than to manufactures and foreign trade.
The Policy of China
40 The policy of China favours agriculture more than all other employments.
- In China, the condition of a labourer much superior to the condition of an artificer.
- In most of Europe, the condition of an artificer is much superior to the condition of a labourer.
- In China, the great ambition of every man is to possess some little land in purchase or lease.
- Leases there are granted on very moderate terms.
- Those terms are sufficiently secured to the lessees.
- The Chinese have little respect for foreign trade.
- The Mandarins of Peking used to say Your beggarly commerce! to the Russian envoy, Mr. de Lange, about it.
- Except with Japan, the Chinese carry on little or no foreign trade themselves and in their own ships.
- They admit foreign ships only in one or two of their ports.
- Foreign trade in China is confined within a much narrower circle than what would naturally extend itself, if more freedom was allowed in Chinese or foreign ships.
Manufactures frequently contain a great value in a small bulk.
- They can be transported cheaper than most rude produce.
- In almost all countries, they are the principal support of foreign trade.
- Manufactures require the support of foreign trade in countries less extensive and less favourably circumstanced for commerce than China.
- Without an extensive foreign market, they could not flourish well.
- They would be confined to:
- countries with a narrow home market, and
- countries where communication was so difficult that it is impossible for goods to be transported to the proper local market.
- The perfection of the manufacturing industry depends on the division of labour.
- The degree to which the division of labour can be introduced into any manufacture is regulated by the extent of the market.
- The Chinese home market is of so extensive because of:
- the great size of the Chinese empire,
- its huge population,
- the variety of its climate which leads to a variety of productions in its different provinces, and
- the easy communication by water transport between its provinces.
- The Chinese home market is alone sufficient to:
- support very great manufactures, and
- allow very considerable subdivisions of labour.
- The Chinese home market is perhaps not much inferior in extent to the entire European market put together.
- If the global foreign market was added to its own Chinese market, especially if most of this trade was carried on in Chinese ships, could surely:
- very much increase Chinese manufactures, and
- very much improve the productivity of its manufacturing industry.
- By a more extensive navigation, the Chinese would naturally learn:
- the art of using and constructing themselves all the machines used in other countries, and
- the other improvements of art and industry in the world.
- "Upon their present plan they have little opportunity except that of the Japanese."
The policy of India and Egypt
The policy of ancient Egypt and India favoured agriculture more than all other employments.
The people there were divided into different castes or tribes.
- Each was confined, from father to son, to a particular employment.
- The son of a priest was a priest.
- The son of a soldier was a soldier.
- The son of a labourer was a labourer.
- The son of a weaver was a weaver.
- The son of a tailor was a tailor, etc.
- In both countries, the caste of the priests held the highest rank.
- The caste of the soldiers was next highest.
- In both countries, the caste of the farmers and labourers was superior to the castes of merchants and manufacturers.
The governments of ancient Egypt and India were particularly attentive to the interest of agriculture.
- The works built by the ancient Egyptian sovereigns for the proper water distribution of the Nile were famous in antiquity.
- Similar works were built by the ancient Indian sovereigns for the proper water distribution of the Ganges and other rivers.
- They were equally great though they were less celebrated.
- Both countries were famous for their great fertility even though they occasionally had dearths.
- Both were extremely populous.
- In years of moderate plenty, they were both able to export plenty of grain.
"The ancient Egyptians had a superstitious aversion to the sea."
- The Hindu religion does not permit its followers to:
- light a fire on the water, and
- dress any victuals on the water.
- In effect, it bans them from all distant sea voyages.
- The Egyptians and Indians must have depended on foreign navigators to export their surplus produce.
- This dependency must have confined the market.
- It must have discouraged the increase of:
- this surplus produce, and
- the manufactured produce, more than the rude produce.
- Manufactures require a more extensive market than the most important rude produce of the land.
- A single shoemaker will make more than 300 pairs of shoes a year.
- His own family will not, perhaps, wear out six pairs.
- He cannot dispose of all of his produce unless he has at least 50 such families as his own.
- In a large country, the most numerous class of artificers will seldom make more than 2% or 1% of the total number of families in it.
- But in large countries such as France and England, the population employed in agriculture was computed:
- by some authors at 50%
- by other authors at 33%
- by no author at less than 20% of the country's total population.
- Most of the agricultural produce of France and England is consumed at home.
- According to these computations, each person employed in it must require little more than the custom of 1-4 such families as his own to dispose of the whole produce of his own labour.
- "Agriculture, can support itself under the discouragement of a confined market much better than manufactures."
- In ancient Egypt and India, the confinement of the foreign market was compensated by the conveniency of many inland navigations.
- These navigations opened their home market to the produce of all their own districts.
- The great extent of India, too, rendered its home market:
- very great, and
- sufficient to support a great variety of manufactures.
- But the small extent of ancient Egypt was never equal to England.
- It must have rendered its home market too narrow to support any great variety of manufactures.
- Bengal is an Indian province.
- It commonly exports the greatest amount of rice.
- It has always been more remarkable for its various manufacturing exports than for its grain exports.
- Ancient Egypt exported some manufactures such as fine linen.
- It was always most distinguished for its great grain exports.
- It was long the granary of the Roman empire.
The sovereigns of China, ancient Egypt, and India have always derived the biggest part of their revenue from land-tax or land-rent.
- This land-tax or land-rent is like the tithe in Europe.
- It consisted in 20% of the produce of the land.
- This produce was delivered in kind or paid in money according to a certain valuation.
- This valuation therefore varied from year to year according to the variations of the produce.
- It was natural therefore that those sovereigns should be attentive to the interests of agriculture.
- The prosperity or decline of agriculture immediately depended the yearly increase or reduction of their own revenue.
Greek and Roman Policy
The policy of the ancient Greek and Roman republics honoured agriculture more than manufactures or foreign trade.
- They discouraged manufactures or foreign trade more than encouraging agriculture directly or intentionally.
- In several ancient Greek states, foreign trade was banned.
- In several others, the employments of artificers and manufacturers were considered hurtful to the human body's strength and agility.
- It rendered the body incapable of habits which their military and gymnastic exercises tried to form.
- Such employments disqualified the body from the fatigues and dangers of war.
- Manufacturing and trade were considered fit only for slaves.
- It was banned for the free citizens.
- Most people of Rome and Athens were effectively excluded from all trades even if trade and manufactures were not banned.
- Trades are now exercised by the lower sort of people of towns.
- Such trades were all occupied by the slaves of the rich.
- They exercised trades for their masters' benefit.
- It was almost impossible for a poor freeman to compete with the work of those slaves because of their masters' wealth, power, and protection.
- Slaves are very seldom inventive.
- All the most important improvements were the discoveries of freemen:
- the arrangement and distribution of work which facilitate and abridge labour
- Should a slave propose any similar improvement, his master would consider it as the suggestion of laziness.
- The master would think that the slave desired to save his own labour at the master's expence.
- The poor slave would probably receive much abuse or some punishment instead of reward.
- In the slave manufactures, more labour must have been employed to execute the same amount of work as those done by free men.
- The work of slaves must generally have been dearer than the work of free men.
Mr. Montesquieu remarked that the Hungarian mines always operated with less cost and more profit than the Turkish mines in their neighbourhood.
- The Hungarian mines are not richer than the Turkish mines.
- They are wrought by free men
- Those men employ a lot of machinery which facilitate and abridge their own labour.
- The Turkish mines are wrought by slaves.
- The arms of those slaves are the only machines the Turks employed
Very little is known about the price of manufactures in the Greek and Roman times.
- It appears that the finer manufactures were excessively dear.
- Silk was sold for its weight in gold.
- In those times, it was all brought from the East Indies, and not made in Europe.
- The transportation costs may account for its high price.
- The price which a lady paid for very fine linen seems equally extravagant.
- Linen was always a European or an Egyptian manufacture.
- Its high labour costs account for its high price.
- Those labour costs again was due to the awkwardness of the machinery which it used.
- The price of fine woollens was not quite so extravagant.
- It was much above the current price.
- According to Pliny, some cloths dyed in a particular manner cost 100 denarii or 800 pence per pound weight.
- Others dyed in another manner cost 1,000 denarii or 8,000 pence per pound weight.
- This high price was principally due to the dye.
- The Roman pound contained only 12 of our avoirdupois ounces.
- But had the cloths not been so dear, expensive dyes would probably not have been used on them.
- The disproportion between the value of the accessory and the value of the principal would have been too great.
- The Triclinaria were a sort of woollen pillows on couches.
- Pliny credibly mentions their price.
- Some Triclinaria cost more than £30,000.
- Others cost more than £300,000.
- This high price was not due to the dye.
- Dr. Arbuthnot observes that there was much less variety in the dress of fashionable people in ancient than in modern times.
- The little variety in the dress of ancient statues confirms his observation.
- He infers that their dress must have been cheaper than ours.
- His conclusion does not seem to follow.
- "When the expence of fashionable dress is very great, the variety must be very small."
- But when the expence of any dress becomes very moderate, the variety will naturally be very great.
- This lower expence is from the improvements in manufacturing productivity.
- The rich will not be able to distinguish themselves by the price of any dress.
- They will naturally distinguish themselves by the multitude and variety of their dresses.
48 The greatest and most important commerce of every nation is the commerce between the town and the countryside.
- The townspeople draw raw materials and subsistence from the countryside.
- They pay for these by processing some of these raw materials and sending them back as manufactured goods to the countryside, ready for use.
- The trade between these two consists ultimately in rude produce exchanged for manufactured produce.
- The dearer the manufactured produce, the cheaper the rude produce.
- Whatever raises the price of manufactured produce in any country, lowers the price of the rude produce and discourages agriculture.
- The fewer manufactured produce which rude produce can buy, the less will be the exchangeable value of that rude produce.
- The landlord will have less encouragement to increase this rude produce by land improvements.
- The farmer will have less encouragement to increase this rude produce through cultivation.
- Whatever reduces the number of artificers and manufacturers reduces the home market and consequently discourages agriculture, because the home market is the most important market for rude produce.
Those systems which prefer agriculture impose restraints on manufactures and foreign trade.
- They act contrary to the very end which they propose.
- They indirectly discourage the agriculture which they mean to promote.
- They are more inconsistent than even the mercantile system.
- The mercantile system encourages manufactures and foreign trade more than agriculture.
- It turns the capital of society from supporting a more advantageous, to support a less advantageous industry.
- But it really and ultimately encourages the industry which it means to promote.
- Those agricultural systems, on the contrary, really and ultimately discourage their own favourite industry.
Thus, economic systems can subvert the great purpose they mean to promote if they:
- draw, by extraordinary encouragements, more of society's capital towards a particular industry, than what would naturally go to it, and
- force, by extraordinary restraints, from a particular industry some of the capital which would otherwise be employed in it
Such systems retard the progress of society towards real wealth and greatness instead of accelerating it.
- They reduce the real value of the national annual produce, instead of increasing it.
51 When preference or restraint is completely removed from all systems, the obvious and simple system of natural liberty establishes itself of its own accord.
- Every man is left perfectly free to pursue his own interest his own way as long as he does not violate the laws of justice.
- Every man is free to bring his industry and capital into competition with others.
- The sovereign is completely discharged from a duty which would always expose him to innumerable delusions.
- No human wisdom or knowledge could ever be sufficient to properly perform this duty of:
- superintending private people's industry
- directing private industry towards employments most suitable to the interest of society
- According to the system of natural liberty, the sovereign has only three important duties which are plain and intelligible to common understandings:
- The duty of protecting society from violence and invasion of other independent societies
- The duty of establishing an exact administration of justice
The duty of building and maintaining public works and institutions which can never be for the interest of any individual to build and maintain
- The duty of protecting every member of society from the injustice or oppression of its other members
- Because the profit could never repay the cost to any individual, although it may frequently repay and do much more for a great society
The proper performance of those duties necessarily incurs a certain cost.
- This cost necessarily requires a certain revenue to support it.
- In Book 5, I shall explain in three chapters:
- What are the sovereign's necessary expences
Methods how society may be made to contribute towards defraying the expences incumbent on the whole
- Which of those expences should be defrayed by the contribution of:
- the whole society
- a particular part or members of society only
The reasons and causes which have induced modern governments to contract debts or mortgage part of this revenue
- The principal advantages and inconveniences of each of those methods
- What were the effects of those debts on the society's real wealth.
Next: Chapter 1a: The development of militaries