Chapter 9a: Economic systems which represent the produce of land as the principal source of wealth -- The French system
No nation has ever adopted the system which represents the produce of land as the sole source of the country's revenue and wealth.
- It presently exists only in the speculations of a few learned and ingenuous French men.
- It would not be worthwhile to examine at length the errors of this system which never has done and probably never will do any harm in the world.
- I shall only explain the outlines of this very ingenious system.
Jean Baptiste Colbert
Mr. Colbert was the famous minister of Louis XIV.
- He was an honest, hardworking, and meticulous man.
- He had:
- great experience and acuteness in examining public accounts
- the skills needed to introduce good systems of collecting and spending the public revenue
- Unfortunately, he embraced all the prejudices of the mercantile system.
- Restraint and regulation was the nature of the mercantile system.
- It was agreeable to a laborious and plodding businessman, who was used to:
- regulating the departments of public offices and
- establishing the necessary checks and controls for confining each department to its proper sphere
- Mr. Colbert endeavoured to regulate French industry and commerce on the same model as the departments of a public office.
- Instead of allowing every man to pursue his own interest in his own way on the liberal plan of equality, liberty, and justice, he:
- bestowed extraordinary privileges on certain industries
- laid extraordinary restraints on others
- encouraged the industry of the towns more than the industry of the countryside, like other European ministers:
- he was willing even to depress the industry of the countryside to support the industry of the towns
- he prohibited the wheat exports in order to:
- render provisions cheap to the townspeople
- encourage manufactures and foreign commerce
- He excluded the people of the countryside from every foreign market for their most important produce.
- The French countryside has a naturally fertile a soil and a happy climate.
- This prohibition discouraged and kept down the agriculture of that countryside very much below what it naturally would have risen to.
- This prohibition was joined to:
- the restraints imposed by the ancient French provincial laws on the transportation of wheat from one province to another
- the arbitrary and degrading taxes levied on the cultivators in almost all the provinces
- This discouragement and depression was felt throughout France.
- Many inquiries were set concerning its causes.
- One of those causes was the preference given by Mr. Colbert's institutions to the industry of the towns.
4 "If the rod be bent too much one way, says the proverb, in order to make it straight you must bend it as much the other."
- The French philosophers adopted this proverbial maxim.
- They proposed the system which represents agriculture as the sole source of the revenue and wealth of every country.
- In Mr. Colbert's plan, the industry of the towns was over-valued compared with that of the countryside.
- In the plan of the French philosophers, the industry of the towns was as under-valued.
5 The French philosophers divided people who contribute to the national annual produce, into three classes:
- The proprietors of land
- The cultivators, farmers, and country labourers
Artificers, manufacturers, and merchants
- They honour this class with the title of the productive class
- They degrade this class with the humiliating title of the barren or unproductive class
6 The class of proprietors contributes to the national annual produce by their expences on the improvement of the land.
- This improvement includes buildings, drains, enclosures, and other ameliorations which they make or maintain on the land.
- These enable the cultivators to raise more produce and pay more rent.
- This advanced rent is the interest or profit due to the proprietor for his cost in improvement.
- In this system, such costs are called ground expences (depenses foncieres)
7 The cultivators or farmers contribute to the annual produce by their expences on land cultivation.
- In this system, those expences are called the original and annual expences (depenses primitives et depenses annuelles)
- The original expences consist in:
- The instruments of husbandry
- The stock of cattle
- The seed
- The maintenance of the farmer's family, servants, and cattle during his first year of occupancy or until he can receive some return from the land
- The annual expences consist in:
- The seed
- The wear and tear of the instruments of husbandry
- The annual maintenance of the farmer's servants, cattle, and his family considered as servants employed in cultivation.
The produce which remains to him after paying the rent should be sufficient:
- To replace to him all of his original expences together with ordinary profits, within a reasonable time
- To replace to him annually all of his annual expences, together with ordinary profits
Those two sorts of expences are the two capitals which the farmer employs in cultivation.
- Unless they are regularly restored to him with a reasonable profit, he cannot continue his employment on a level with other employments.
- From a regard to his own interest, he must desert it as soon as possible and seek some other employment.
The produce of land needed to enable the farmer to continue his business should be considered as a fund sacred to cultivation.
- If the landlord violates this fund, he reduces the produce of his own land.
- In a few years, the farmer is disabled from paying the rent.
- The rent which properly belongs to the landlord is the net produce which remains after paying all the expences in raising the whole produce.
- The labour of the cultivators affords a net produce over and above paying all those expences.
- This is why they are called the productive class by this system.
This system calls their original and annual expences as productive expences because they reproduce this net produce and replace their own value.
8 The ground expences is what the landlord spends on improving his land.
- In this system, they are honoured with the title of productive expences
- Until all of those expences, together with ordinary profits, have been repaid by the advanced rent, that advanced rent should be regarded as sacred by the church and the king.
- It should not be subject to tithe nor taxation.
- If it is subjected, it will discourage the improvement of land.
- The church discourages the future increase of her own tithes.
- The king discourages the future increase of his own taxes.
- Those ground expences are considered as productive expences because:
- They reproduce their own value in the completest manner
- They reproduce a net produce after a certan time
This system only considers three sorts of expences as productive:
- The ground expences of the landlord
- The original expences of the farmer
- The annual expences of the farmer
All other expences and all other orders of people are represented as barren and unproductive, even those we commonly regard as the most productive
10 We commonly think that the industry of artificers and manufacturers increases the value of rude produce so much.
- In this system, they are represented as a barren and unproductive class.
- The labour of artificers and manufacturers replaces only the stock which employs them, together with ordinary profits.
- That stock consists in the materials, tools, and wages advanced to them by their employer.
- It is the fund for their employment and maintenance.
- Its profits are the fund for their employer's maintenance
- Their employer advances to them the materials, tools, and wages needed for their work.
- He advances to himself what is necessary for his own maintenance.
- He proportions this maintenance to the profit he expects to make by the price of their work.
- The price does not repay his whole expence if it does not pay:
- The maintenance he advances to himself
- The materials, tools, and wages he advances to his workmen
Therefore unlike rent, the profits of manufacturing stock are not a net produce which remains after repaying the whole expence for that stock.
11 Mercantile stock is equally barren and unproductive with manufacturing stock.
- The farmer's stock yields a profit to the farmer as that of the master manufacturer.
- It yields a rent to the landlord
- But the manufacturer's stock does not yield a revenue to another person
- The expence of employing and maintaining artificers and manufacturers only continues its own value
- It does not produce any new value
- Therefore, it is an unproductive expence
On the contrary, the expence of employing farmers and country labourers continue its own value
- It produces a new value in the rent of the landlord
- It is therefore a productive expence
- It only continues its own value, without producing any new value.
- Its profits are only the repayment of the maintenance its employer advances to himself.
- They are only the repayment of a part of the expence in employing it.
12 The labour of artificers and manufacturers never adds anything to the value of the total rude produce of the land.
- It adds greatly to the value of some of it.
- But the consumption it creates in other parts is precisely equal to the value which it adds to those parts.
- The value of the whole amount is not increased.
For example, the person who works the lace of a pair of fine ruffles, might raise the value of 1 pence flax to 7,200 pemce.
- At first sight, he appears to multiply the value of the rude produce arout 7,200 times.
- In reality, he adds nothing to the value of the total rude produce
- The working of that lace might cost him two years labour
- The 7,200 pence he gets for it is the repayment of the subsistence he advanced to himself during those two years he worked on it
- He adds to the flax the value of his labour every day, month, or year
- This value only replaces the value of his own consumption during that day, month, or year
- He does not add anything to the value of the whole annual amount of the rude produce of the land
- That produce which he is continually consuming is always equal to the value he is continually producing
- The extreme poverty of most persons employed in this expensive though trifling manufacture proves that the price of their work does not exceed the value of their subsistence ordinarily
It is otherwise with the work of farmers and country labourers.
- In ordinary cases, the rent of the landlord is a value which it is continually producing.
- It completely replaces the whole consumption and expence spent for the workmers and their employer
13 Artificers, manufacturers, and merchants can increase the revenue and wealth of their society only by parsimony or privation.
- Privation is depriving oneself the funds for one's own subsistence.
- They annually reproduce nothing but those funds.
- The revenue and wealth of their society can never be increased by their industry unless they:
- annually save some of those funds
- annually deprive themselves of the enjoyment of some of them
On the contrary, farmers and country labourers may completely enjoy the whole funds for their own subsistence while increasing the revenue and wealth of their society.
- Their industry affords a net produce over and above what is destined for their own subsistence.
- The augmentation of this net produce augments the revenue and wealth of their society.
The interest of nations so differently circumstanced is very different.
- Nations which consist chiefly of proprietors and cultivators, like France or England, can be enriched by industry and enjoyment.
- Nations which consist chiefly of merchants, artificers, and manufacturers, like Holland and Hamburgh, can grow rich only through parsimony and privation.
Their peoples' common character are different from other peoples.
- In nations of proprietors and cultivators, liberality, frankness and good fellowship naturally are the common character.
- In nations of merchants, artificers, and manufacturers, narrowness, meanness, selfishness, and aversion to all social pleasure are the common character
Next: Chapter 9b: The Unproductive class