Chapter 11

Chapter 12 Unproductive Capital Icon

September 30, 2015

Values once produced may be devoted, either to the satisfaction of the wants of those who have acquired them, or to a further act of production. They may also be withdrawn both from unproductive consumption and from reproductive employment, and remain buried or concealed.

The owner of values, in so disposing of them, not only deprives himself of the self-gratification he might have derived from their consumption, but also of the advantage he might draw from the productive agency of the value hoarded. He furthermore withholds from industry the profits it might make by the employment of that value.

Chapter 13: Immaterial Products, or Values Consumed at the Moment of Production

A physician goes to visit a sick person, observes the symptoms of disease, prescribes a remedy, and takes his leave without depositing any product, that the invalid or his family can transfer to a third person, or even keep for the consumption of a future day.

Amongst abundance of other causes of the misery and weakness of the countries subjected to the Ottoman dominion, it cannot be doubted, that one of the principal is, the vast quantity of capital remaining in a state of inactivity.

The general distrust and uncertainty of the future induce people of every rank, from the peasant to the pacha, to withdraw a part of their property from the greedy eyes of power and value can never be invisible, without being inactive. This misfortune is common to all countries, where the government is arbitrary, though in different degrees proportionate to the severity of despotism.

For the same reason, during the violence of po

Has the industry of the physician been unproductive? Who can for a moment suppose so? The patient’s life has been saved perhaps. Was this product incapable of becoming an object of barter? By no means= the physician’s advice has been exchanged for his fee; but the want of this advice ceased the moment it was given. The act of giving was its produc- 50Book I= On Production and public functionaries might be abundantly amused, well versed in religious doctrines, and admirably governed; but that is all. Its capital would receive no direct accession from the total labour of all these individuals, though industrious enough in their respective vocations, because their products would be consumed as fast as produced. tion, of hearing its consumption, and the consumption and production were simultaneous.

This is what I call an immaterial product.

The industry of a musician or an actor yields a product of the same kind= it gives one an amusement, a pleasure one can not possibly retain or preserve for future consumption, or as the object of barter for other enjoyments. This pleasure has its price, it is true, but it has no further existence, except perhaps in the memory, ana no exchangeable value, after the instant of its production.

Consequently, nothing is gained on the score of public pros- perity, by ingeniously creating an unnatural demand for the labour of any of these professions; the labour diverted into that channel of production can not be increased, without in- creasing the consumption also. If this consumption yield a gratification, then indeed we may console ourselves for the sacrifice; but when that consumption is itself an evil, it must be confessed the system which causes, it is deplorable enough. Smith will not allow the name of products to the results of these branches of industry. Labour so bestowed he calls un- productive; an error he was led into by his definition of wealth, which he defines to consist of things bearing a value capable of being preserved, instead of extending the name to all things bearing exchangeable value= consequently, excluding products consumed as soon as created. The industry of the physician, however, as well as that of the public functionary, the advocate or the judge, which are all of them of the same class, satisfies wants of so essential a nature, that without those professions no society could exist. Are not, then, the fruits of their labour real? They are so far so, as to be purchased at the price of other and material products, which Smith allows to be wealth; and by the repetition of this kind of barter, the producers of immaterial products acquire fortunes. 109

This occurs in practice, whenever legislation is too compli- cated. The study of the law, becoming more intricate and te- dious, occupies more persons, whose labour must likewise be better paid. What does society gain by this? Are the re- spective rights of its members better protected? Undoubtedly not= the intricacy of law, on the contrary, holds out a great encouragement to fraud, by multiplying the chances of eva- sion, and very rarely adds to the solidity of title or of right. The only advantage is, the greater frequency and duration of suits. The same reasoning applies to superfluous offices in the publit administration. To create an office for the adminis- tration of what ought to be left to itself, is to do an injury to the subject in the first instance, and make him pay for it after- wards as if it were a benefit. 112

To descend to items of pure amusement, it cannot be denied, that the representation of a good comedy gives as solid a plea- sure as a box of comfits, or a discharge of fire-works, which are products, even within Smith’s definition. Nor can I dis- cover any sound reason, why the talent of the painter should be deemed productive, and not the talent of the musician. 110 Wherefore it is impossible to admit the inference of 113 M. Garnier, that because the labour of physicians, lawyers, and the like, is productive, therefore a nation gains as much by the multiplication of that class of labour as of any other. This would be the same as bestowing upon a material product more manual labour than is necessary for its completion. The labour productive of immaterial products, like every other labour, is productive so far only as it augments the utility, and thereby the value of a product= beyond this point it is a purely unpro- ductive exertion. To render the laws intricate purposely to give lawyers full business in expounding them, would be equally absurd, as to spread a disease that doctors may find practice.

Smith himself has exposed the error of the economist in confining the term, wealth, to the mere value of the raw material contained in each product; he advanced a great step in political economy, by demonstrating wealth to consist of the raw material, plus the value added to it by industry; but, having gone so far as to promote to the rank of wealth an abstract commodity, value, why reckon it as nothing, however real and exchangeable, when not incorporated in matter? This is the more surprising, because he went so far as to treat of labour, abstracted from the matter wherein it is employed; to exam- ine the causes which operate upon and influence its value; and even to propose that value as the safest and least variable measure of all other values. 111 Immaterial products are the fruit of human industry, in which term we have comprised every kind of productive labour. It is not so easy to understand how they can at the same time be the fruit of capital. Yet these products are for the most part the result of some talent or other, which always implies pre- vious study; and no study can take place without advances of capital. The nature of immaterial products makes it impossible ever to accumulate them, so as to render them a part of the na- tional capital. A people containing a host of musicians, priests, 51Jean-Baptise Say, A Treatise on Political Economy Before the advice of the physician can be given or taken, the physician or his relations must first have defrayed the charges of an education of many years’ duration= he must have sub- sisted while a student; professors must have been paid; books purchased; journeys perhaps have been performed; all which implies the disbursement of a capital previously accumu- lated. 114 So likewise the lawyer’s opinion, the musician’s song, &c. are products, that can never be raised without the con- currence of industry and capital. Even the ability of the pub- lic functionary is an accumulated capital. It requires the same kind of outlay, for the education of a civil or military engi- neer, as for that of a physician. Indeed we may take it for granted, that the funds expended in the training of a young man for the public service, are found by experience to be a fair investment of capital, and that labour of this description is well paid; for we find more applicants than offices in al- most every branch of administration, even in countries where offices are unnecessarily multiplied. give my reasons for this opinion when I come to speak of wages. 115

The pleasures one enjoys at the price of any kind of personal exertion, are immaterial products, consumed at the instant of production by the very person that has created them. Of this description are the pleasures derived from arts studied solely for self-amusement. In learning music, a man devotes to that study some small capital, some time and personal labour; all which together are the price paid for the pleasure of singing a new air or taking part in a concert. Gaming, dancing, and field-sports, are labours of the same kind. The amusement derived from them is instantly consumed by the persons who have performed them. When a man ex- ecutes a painting, or makes any article of smith’s or joiner’s work for his amusement, he at the same time creates a du- rable product or value, and an immaterial product, viz., his personal amusement. 116

The industry productive of immaterial products will be found to go through exactly the same process, as, in the analysis made in the beginning of this work, we have shown to be followed by industry in general. This may be illustrated by an example. Before an ordinary song can be executed, the arts of the composer and the practical musician must have been regular and distinct callings; and the best mode of acquiring skill in them must have been discovered; this is the depart- ment of the man of science, or theorist. The application of this mode and of this art, has been left to the composer and singer, who have calculated, the one in composing his tune, the others in the execution of it, that it would afford a pleasure, to which the audience would attach some value or other. Finally, the execution is the concluding operation of industry.

In speaking of capital, we have seen, that part of it is devoted to the production of material products, and part remains wholly unproductive. There is also a further part productive of utility or pleasure, which, can, therefore, be reckoned as a portion neither of the capital engaged in the production of mate- rial objects, nor of that absolutely inactive. Under this head may be comprised dwelling-houses, furniture and decorations, that are an addition to the mere pleasures of life. The utility they afford is an immaterial product.

When a young couple sets up house-keeping for the first time, the plate they provide themselves with cannot be considered as absolutely inactive capital, for it is in constant domestic use; nor can it be reckoned as capital engaged in the raising of material products; for it leads to the production of no one object capable of being reserved for future consumption; nei- ther is it an object of annual consumption, for it may last, perhaps, for their joint lives, and be handed down to’ their children; but it is capital productive of utility and pleasure. Indeed, it is so much value accumulated or in other words withdrawn from reproductive consumption; consequently, yielding neither profit nor interest, but productive of some degree of benefit or utility, which is gradually consumed and incapable of being realised, yet it is possessed of real and positive value, since it is occasionally the object of purchase: as in the instance of the rent of a house or the hire of furni- ture, and the like.

There are, however, some immaterial products, with respect to which the two first operations are so extremely trifling, that one may almost account them as nothing. Of this description is the service of a menial domestic. The art of ser- vice is little or nothing, and the application of that art is made by the employer; so that nothing is left to the servant, but the executive business of service, which is the last and lowest of industrious operations.

It necessarily follows, that, in this class of industry, and some few others practised by the lowest ranks of society, that of the porter for instance, or of the prostitute, &c. &c.= the charge of training being little or nothing, the products may be looked upon not only as the fruits of very coarse and primitive indus- try, but likewise as products, to the creation of which capital has contributed nothing; for I can not think the expense of these agents’ subsistence from infancy, till the age of emanci- pation from parental care, can be considered as a capital, the interest of which is paid by the subsequent profits. I shall Although it be a sad mistake of personal interest to vest the smallest particle of capital in a manner wholly unproductive, it is by no means so to lay out, in a way productive of utility or amusement, so much as may be not disproportionate to the circumstances of the individual. There is a regular gradation 52Book I= On Production of the ratio of capital so vested by individuals respectively, from the rude furniture of the poor man’s hovel, up to the costly ornaments and dazzling jewels of the wealthy. When a nation is rich, the poorest family in it possesses a capital of this kind, not indeed of any great amount, but still enough to satisfy moderate and limited desires. The prevalence of gen- eral wealth in a community is more strongly indicated by meeting universally with some useful and agreeable house- hold conveniences in the dwellings of the inferior ranks, than by the splendid palaces and costly magnificence of a few favourites of fortune, or by the casual display of diamonds and finery we sometimes see brought together in a large city, where the whole wealth of the place is often exhibited at one view, at a fete or a theatre of public resort; but which, after all, are a mere trifle, compared with the aggregate value of the household articles of a great people. purchase of the ground it stands upon, have cost 200,000 dollars, the use the public makes of it may be estimated to cost 10,000 dollars per annum. 117 There are some immaterial products, towards which the land is a principal contributor. Such is the pleasure derived from a park or pleasure-garden. The pleasure is afibrded by the con- tinual and daily agency of the natural object, and is consumed as fast as produced. A ground yielding pleasure must, there- fore, not be confounded with ground lying waste or in fallow. Wherein again appears the analogy of land to capital, of which, as we have seen, some part is productive of immaterial prod- ucts, and some part is altogether inactive. Gardens and pleasure-grounds have generally cost some ex- pense in embellishment; in which case, capital and land unite their agency to yield an immaterial product. The component items of a capital producing bare utility or amusement, are liable to wear and tear, though in a very slight degree; and if that wear and tear be not made good out of the savings of annual revenue, there is a gradual dissipation and reduction of capital. Some pleasure-grounds yield likewise timber and pasturage: these are productive of both classes of products. The old- fashioned gardens in France yielded no material product; those of modern times are somewhat improved in this particular, and would be more so, if culinary herbs and fruit-trees were oftener introduced. Doubtless, it would be harsh to find fault with a proprietor in easy circumstances, for appropriating part of his freehold to the mere purpose of amusement. The de- lightful moments he there passes with his family around him, the wholesome exercise he takes, the spirits he inhales, are among the most valuable and substantial blessings of life. By all means then let him lay out on the ground as he likes, and give full scope to his taste, or even caprice; but if caprice can be directed to an useful end, if he can derive profit without abridging enjoyment, his garden will have additional merit, and present a two-fold source of delight to the eye of the statesman and the philosopher. This remark may appear trifling; yet how many people think they are living upon their revenue, when they are at the same time partially consuming their capital! Suppose, for instance, a man is the proprietor of the house he lives in; if the house be calculated to last 100 years, and have cost 20,000 dollars in the building, it costs the proprietor or his heirs 200 dollars per annum, exclusive of the interest upon the original cost, otherwise the whole capital will be extinguished, or nearly so, by the end of 100 years. The same reasoning is applicable to every other item of capital devoted to the production of utility or pleasure; to a sideboard, a jewel, every imaginable object, in short, that comes under the same denomination. And, vice versa, when annual revenue, arising from whatever source, is encroached upon for the purpose of enlarging the capital devoted to the production of useful or agreeable ob- jects, there is an actual increase of capital and of fortune, though none of revenue. I have seen some few gardens possessed of this double fac- ulty of production; whence, although the lime, horse-chest- nut and sycamore trees, and others of the ornamental kind, were by no means excluded, any more than the lawns and parterres; yet at the same time the fruit-trees, decked in the bloom of vernal promise, or weighed down by the maturity of autumnal wealth, added a variety and richness of colouring to the other local beauties. The advantages of distance and position were attended to without violating the convenience of division and inclosure. The beds and borders, planted with vegetables, were not provokingly straight, regular, or uniform, but harmonised with the undulations of the surface, and of vegetation of larger growth; and the walks were so disposed as to serve both for pleasure and cultivation. Every thing was arranged with a view to ornament, even to the vine-trelliced well for filling the watering pots. The whole, in short, was so ordered, as if designed to impress the conviction, that utility Capital of this class, like all other capital, without exception, is formed by the partial accumulations of annual products. There is no other way of acquiring capital, but by personal accumulation, or by succession to accumulation of others. Wherefore, the reader is referred on this head to Chap. XI, where I have treated of the accumulation of capital. A public edifice, a bridge, a highway, are savings or accumu- lations of revenue, devoted to the formation of a capital, whose returns are, an immaterial product consumed by the public at large. If the construction of a bridge or highway, added to the and beauty are by no means incompatible, and that pleasure may grow up by the side of wealth.