Chapter 2

The Sources of Revenue Icon

September 30, 2015

Book 1 showed that products are raised by the productive means at the command of mankind, that is to say, by human industry, capital, and natural powers and agents.

The products thus raised, form the revenue of those possessed of these means of production, and enable them to procure such of the necessaries and comforts of existence, as are not furnished gratuitously either by nature, or by their fellow-creatures.

Such as are capable of consumption, as, for instance, the float-ing values, whereon production expends its energies, may be consumed either in such manner as to occasion a re-production, in which case they will still constitute a part of the means of production; or in such manner as to yield no further production, in which case they cease to form any part of those means, and are devoted to pure destruction, more or less rapid.

Although revenue, as well as the sources of production, is a constituent part of individual wealth, yet no one is reputed to reduce his fortune by the consumption of his revenue only, provided that he does not encroach upon his productive means; because revenue is a regenerating product, whereas the means of production, so long as they continue to exist, are a constant and perpetual source of new products. The exclusive right to dispose of revenue is a consequence of the exclusive right, or property, in the means of production;

and such of them, aq are not the subject of human appropriation, are not either items of productive means, or sources of revenue; they form no part of human wealth, which implies appropriation and exclusive possession; for there is no such thing as wealth, unless where property is known and established, and where possession is both acknowledged and secured.

The current value of these appropriable sources of production is established on the same principles, as that of all other objects; that is to say, by the conflicting influence of supply and demand. The only remark that need be made upon it is, that the demand does not originate in the enjoyment antici- pated from the immediate use of the particular source; for a field or an implement of trade yields to the owner no direct enjoyment, which is capable of estimation; their value has reference to the value of the product they are capable of rais- ing, which itself originates in the utility of that product, or the satisfaction it may be capable of affording.

The origin or the justice of the right of property, it is unneces- sary to investigate, in the study of the nature, and progress of human wealth. Whether the actual owner of the soil, or the person from whom he derived its possession, have obtained it by prior occupancy, by violence, or by fraud, can make no difference whatever in the business of the production and dis- tribution of its product or revenue.

Perhaps it is scarcely necessary to remark, that property in that class of productive means, which has been called human

With regard to those sources, that are inalienable, as are the human faculties of mind and body, they can never be the sub- ject of actual exchange, and their value is a matter of mere mental estimation, grounded upon the value they may be ca- pable of producing Thus the productive means of this de- scription, which yield to an artisan the wages of 1 dollar a day, or of 365 dollars a year, may be reckoned equivalent to a vested capital yielding an equal annua. revenue. but to the quantity of the product obtained, to the sum total of utility created.

Thus we find, that the ratio of national revenue, in the aggre- gate, is determined by the amount of the product, and not by its value. 7 It is not so with individual revenue; because a varia- tion in the relative value of different products will operate to swell that of one individual, or class, at the expense of an- other.

And now that we have taken this general and cursory view of the sources of production and of revenue in the abstract, we may enter upon a more minute analysis of their nature, which will lead us into the labyrinth of the science of political economy, and furnish us with a clue to some of its most intri- cate windings.

Could each member of society live on the primary products whereof his revenue is composed, the relative degree of rev- enue would, like that of nations, in the aggregate, depend upon the amount of the product, upon the sum of utility cre- ated, and not upon its exchangeable value. But, in a state of society at all elevated above barbarism, this is impossible; each individual consumes a much less quantity of his own peculiar product, than of those of other people, which he buys with his own. The grand point, therefore, of individual im- portance to the producer, is, the quantity of product not of his own creation, which he may be able to procure with his own productive means, or with the products created by their agency. Suppose, for instance, the land, capital, and personal facul- ties of a particular individual to be engaged in the cultivation of saffron; as he will probably himself consume little or no saffron, his revenue will consist of such other objects, as his annual crop of saffron can be exchanged for; and the ratio of that revenue will be elevated by a rise in the price of saffron; while that of the consumers of that article will be proportion- ately reduced to the full extent of the rise of its price. On the contrary, their revenue will be augmented in like manner by a fall of its price, to the prejudice of the revenue of the grower. The immediate result of these sources is not, strictly speak- ing, a product, but a productive service that helps us to a product. Products should, therefore, be considered as the re- sult of an interchange of productive service on the one hand, and the actual products on the other, subsequently to which, revenue appears for the first time in the shape of products; and these again may be exchanged for other products, into which latter form the same revenue will then be converted. The conception of this matter will be rendered clearer by a practical illustration. A piece of arable land yields an annual product, say of 300 bushels of wheat, whereof 200 bushels more or less, may be considered as resulting from the agency of the capital and industry employed in its cultivation, and the remaining 100 bushels as resulting from the natural pro- ductive powers of the soil. The revenue, yielded by the land to the proprietor, will have appeared first in the way of con- curring productive service afforded by the object of prop- erty, the land= which productive service will have been trans- ferred or lent to the cultivator for the sum of 100 bushels of wheat, and this will be the first act of exchange. If these 100 bushels of wheat be converted into Specie, either by the pro- prietor himself or by the cultivator on his behalf, and in con- sequence of a mutual arrangement, this specie will still be the same identical revenue, though under the secondary form of money.

Every saving in the charges of production, that is to say, ev- ery saving in the productive agency exerted to raise the same product, is an increase of the revenue of the community to an equal extent; as, for example, the contrivance to raise as much upon one acre of land as before upon two, or to effect with two days’ labour, what before required as much as four; for the productive agency thus released may be directed to the increase of production. 8 And this accession of revenue will accrue to the individual benefit of the contriver, so long as the contrivance can be confined to his own knowledge; but to that of consumers at large, as soon as the notoriety shall have awakened competition, and obliged him to limit his profits to the actual charges of production.

This analysis will conduct us to a knowledge of the real value of revenue, which falls in with the general definition of value given in the preceding chapter, namely, the amount of other objects obtainable by exchange for the object of intended transfer What, then, is the object of transfer, for which rev- enue is given in exchange? why, the productive service of those means, that the receiver of revenue may be possessed of. And what is obtained by the primary act of exchange, which we designate production? why, products. Wherefore, the value of revenue is large in proportion, not to the value, However revenue may be transformed by the various acts of exchange, commencing with the productive agency, which is the primitive exhibition of revenue, it remains the same in substance, until the moment of its ultimate consumption. The revenue yielded by an acre of arable land remains, in reality, the same, both after its primary exchange, by the act of pro- 161Jean-Baptise Say, A Treatise on Political Economy duction, into the form of wheat, and after its secondary trans- formation into silver coin, even although the wheat have been consumed by the purchasers. But, as soon as the revenued individual converts his silver coin into an object of consump- tion, and that object is simply consumed, the value of his revenue thenceforth ceases to exist, and is destroyed and lost, although the silver coin, whose form it once assumed, con- tinue in existence. It must not be imagined still to exist in the hands of the temporary holder of the coin, although lost to the receiver of revenue; but is equally lost to mankind at large; for the actual holder of the coin must have obtained posses- sion of it by the transfer of other revenue of his own, or of some source of revenue before in his own possession. consists, i.e., of the value of its aggregate productive powers, and to its high relative degree to the value of the objects of external attainment. The value of productive agency must be high, even where that of products is low; for it should be always recollected, that, since the intensity of value depends upon the quantity of objects obtainable in exchange, revenue, or, in other words, the agency of the national sources of pro- duction, is large, in proportion to the abundance and cheap- ness of the products derived from them.

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