Adam Smith's Simplified Wealth of Nations, Book 4, Chapter 9b: the unproductive class
Chapter 9b: The unproductive class
14 The unproductive class is composed of merchants, artificers, and manufacturers.
It is maintained and employed at the expence of:
the proprietor class
the cultivator class
These two furnish the unproductive class with:
the fund of its subsistence
the corn and cattle it consumes while employed
The proprietors and cultivators finally pay:
The wages of all the unproductive class' workers
The profits of all their employers
Those workers and their employers are the servants of the proprietors and cultivators.
They are servants who work outdoors.
Menial servants are servants who work indoors.
Both are equally maintained at the expence of the same masters.
The labour of both is equally unproductive.
It adds nothing to the total value of the rude produce.
Instead of increasing the total value, it is an expence which must be paid out of it.
15 The unproductive class is greatly useful to the proprietor class and the cultivator class.
By the industry of merchants, artificers, and manufacturers, the proprietors and cultivators can buy:
local manufactured goods
They can buy them with their produce cheaper than if they made those goods themselves or imported them.
Through the unproductive class, the cultivators can focus on cultivating instead of manufacturing or trading.
Their undivided attention creates superior produce.
Their superior produce would be enough to pay for employing the unproductive classes.
The industry of merchants, artificers, and manufacturers contributes indirectly to increase the produce of the land.
It increases labour productivity by leaving it free to confine itself to cultivation.
The plough gets easier and better by the labour of the man whose business is most remote from the plough.
16 It can never be the interest of the proprietors and cultivators to restrain or discourage the industry of merchants, artificers, and manufacturers.
The more the liberty of this unproductive class, the more the competition will be in all its trades
The proprietor and the cultivators classes can be supplied with cheaper goods
17It can never be the interest of the unproductive class to oppress the other two classes.
The surplus produce of the land maintains and employs the unproductive class.
This surplus is what remains after deducting the maintenance of the:
The greater this surplus, the greater the maintenance and employment of the unproductive class
The establishment of perfect justice, liberty, and equality is the very simple secret which most effectively secures the greatest prosperity to all three classes
18 Holland and Hamburgh are mercantile states
Their merchants, artificers, and manufacturers are maintained at the expence of the proprietors and cultivators of land
The only difference is that those proprietors and cultivators are at an inconvenient distance from the merchants, artificers, and manufacturers whom they supply
Those merchants, artificers, and manufacturers live in other countries under other governments
Such mercantile states, however, are greatly useful to the people of those other countries
They fill up a very important void
They supply the place of the merchants, artificers, and manufacturers who should be found at home
They cannot be found in their home country due some defect in their policy
20 It can never be the interest of those landed nations to distress the industry of such mercantile states by imposing high duties.
Such duties render their commodities dearer
They sink the real value of the surplus produce of their own land with the high price of imported commodities
They only discourage the increase of that surplus produce
They discourage the improvement and cultivation of their own land
The most effective expedient, on the contrary, is to allow the most perfect freedom of trade to all mercantile nations.
raise the value of their own surplus produce
encourage its increased value
encourage the improvement and cultivation of their own land
21 This perfect freedom of trade is even the most effectual expedient for:
Supplying them with all the artificers, manufacturers, and merchants they wanted at home
Filling up in the most proper and advantageous way that very important void which they felt there
22 In time, the continual increase of the surplus produce of their land would create more capital than could be employed with ordinary profit.
The surplus capital would naturally turn to employ artificers and manufacturers at home.
At home, they would find:
the fund of their subsistence
They might immediately be able to work as cheap as the artificers and manufacturers of mercantile states, even though with less skill
Local manufacturers might be able to sell their goods at home as cheap as the goods of mercantile states.
Those foreign goods might be sourced very far away, increasing its price
As their art and skill improved, they would soon be able to sell it cheaper
The artificers and manufacturers of such mercantile states would immediately be rivalled in the market of those landed nations.
They will be soon undersold and jostled out of it altogether
The gradual improvements of art and skill would increase the cheapness of the manufactures of those landed nations.
In due time, those manufactures will extend their sale to foreign markets
They will gradually jostle out many of the manufacturers of mercantile nations
23In due time, this continual increase of the produce of those landed nations would create more capital than could be employed in agriculture or in manufactures with the ordinary rate of profit.
This surplus capital would naturally turn to foreign trade.
It would be employed in exporting its own country's surplus produce.
The merchants of a landed nation would have an advantage over merchants of mercantile nations in the same way that the artificers and manufacturers of mercantile nations had over those of landed nations.
The merchants of a landed nation will have at home the cargo, stores, and provisions which foreign merchants seek.
With inferior navigation skills, they would be able to sell that cargo as cheap overseas as the merchants of mercantile nations
With equal navigation skills, they would be able to sell it cheaper.
They would soon rival those mercantile nations in foreign trade and jostle them out in due time.