Chapter 5

Individual Consumption — Its Motives and its Effects Icon

September 30, 2015

Great inequality of private fortune is hostile to those kinds of consumption, that must be regarded as most judicious. In proportion as that inequality is more marked, the artificial wants of the population are more numerous, the real ones more scantily supplied, and the rapid consumption more common and destructive. The patrician spendthrifts and imperial gluttons of ancient Rome thought they never could squander enough. Besides, immoral kinds of consumption are infinitely more general, where the extremes of wealth and poverty are found blended together. In such a state of society, there are few, who can indulge in the refinement of luxury, but a vast number, who look on their enjoyments with envy, and are ever impatient to imitate them.

To get into the privileged class is the grand object, be the means ever so questionable; and those who are little scrupulous in the acquirement, are seldom more so in the employment of wealth. 14

The consumption of individuals, as contrasted with that of the public or community at large, is such as is made with the object of satisfying the wants of families and individuals.

These wants chiefly consist in those of food, raiment, lodging, and amusement. They are supplied with the necessary articles of consumption in each department, out of the respective revenue of each family or individual, whether de- rived from personal industry, from capital, or from land.

The wealth of a family advances, declines, or remains stationary, according as its consumption equals, exceeds, or falls short of its revenue. The aggregate of the consumption of all the individuals, added to that of the government for public pur- poses, forms the grand total of national consumption. A family, or indeed a community, or nation, may certainly consume the whole of its revenue, without being thereby im- poverished; but it by no means follows, that it either must, or would act wisely, in so doing. Common prudence would coun- sel to provide against casualties. Who can say with certainty, that his income will not fall off, or that his fortune is exempt from the injustice, the fraud, or the violence of mankind? Lands may be confiscated; ships may be wrecked; litigation may involve him in its expenses and uncertainties. The rich- est merchant is liable to be ruined by one -unlucky specula- tion, or by the failure of others. Were he to spend his whole income, his capital might, and in all probability would, be continually on the decline. The government has, in all countries, a vast influence, in de- termining the character of the national consumption; not only because it absolutely directs the consumption of the state it- self, but because a great proportion of the consumption of individuals is gained by its will and example. If the govern- ment indulge a taste for splendour and ostentation, splendour and ostentation will be the order of the day, with the whole host of imitators; and even those of better judgment and dis- cretion must, in some measure, yield to the tor rent. For, how seldom are they independent of that consideration and good opinion, which, under such circumstances, are to be earned, not by personal qualities, but by a course of extravagance they can not approve? But, supposing it to remain stationary, should one be content with keeping it so? A fortune, however large, will seem little enough, when it comes to be divided amongst a number of children. And, even if there be no occasion to divide it, what harm is there in enlarging it; so it be done by honourable means? what else is it, but the desire of each individual to better his situation, that suggests the frugality that accumu- lates capital, and thereby assists the progress of industry, and leads to national opulence and civilisation? Had not previous generations been actuated by this stimulus, the present one would now be in the savage state; and it is impossible to say, how much farther it may yet be possible to carry civilization. It has never been proved to my satisfaction, that nine-tenths of the population must inevitably remain in that degree of misery and semi-barbarism, which they are found in at present in most countries of Europe. First and foremost in the list of injudicious kinds of consump- tion stand those which yield disgust and displeasure, in lieu of the gratification anticipated. Under this class may be ranged, excess and intemperance in private individuals; and, in the state, wars undertaken with the motive of pure vengeance, like that of Louis XIV in revenge for the attacks of a Dutch newspaper, or with that of empty glory, which leads com- monly to disgrace and odium. Yet such wars are even less to be deplored for the waste of national wealth and resources, than for the irremediable loss of personal virtue and talent sacrificed in the struggle; a loss which involves families in distress enough, when exacted by the public good, and by the pressure of inexorable necessity; but must be doubly shock- ing and afflicting, when it originates in the caprice, the wick- edness, the folly, or the ungovernable passions of national rulers. The observance of the rules of private economy keeps the consumption of a family within reasonable bounds= that is to 219Jean-Baptise Say, A Treatise on Political Economy abridgment of his personal gratifications, not at the expense of the public, according to the vulgar notion; it has been with- drawn from no productive occupation, and will at any rate re- appear at his death, and be available for the purpose of ex- tending the operations of industry, if it be not squandered by his heirs, or so effectually concealed, as to evade all search or recovery. say, the bounds prescribed in each instance by a judicious comparison of the value sacrificed in consumption, with the satisfaction it affords. None but the individual himself, can fairly and correctly estimate the loss and gain, resulting to himself or family from each particular act of consumption; for the balance will depend upon the fortune, the rank, and the wants of himself and family; and, in some degree, per- haps, upon personal taste and feelings. To restrain consump- tion within too narrow limits, would involve the privation of gratification that fortune has placed within reach; and, on the other hand, a too profuse consumption might trench upon resources, that it might be but common prudence to husband. 15 It is absurd in spendthrifts to boast of their prodigality, which is quite as unworthy the nobleness of our nature, as the sordid meanness of the opposite character. There is no merit in con- suming all one can lay hands upon, and desisting only when one can get no more to consume; every animal can do as much; nay, there are some animals that set a better example of provident management. It is more becoming the character of a being gifted with reason and foresight, never to con- sume, in any instance, without some reasonable object in view. At least, this is the course that economy would prescribe. Individual consumption has constant reference to the charac- ter and passions of the consumer. It is influenced alternately by the noblest and the vilest propensities of our nature; at one time it is stimulated by sensuality; at another by vanity, by generosity, by revenge, or even by covetousness. It is checked by prudence or foresight, by groundless apprehension, by distrust, or by selfishness. As these various qualities happen in turn to predominate, they direct mankind in the use they make of their wealth. In this, as in every other action of life, the line of true wisdom is the most difficult to observe. Hu- man infirmity is perpetually deviating to the one side or the other, and seldom steers altogether clear of excess. 16 In short, economy is nothing more than the direction of hu- man consumption with judgment and discretion,-the knowl- edge of our means, and the best mode of employing them. There is no fixed rule of economy; it must be guided by a reference to the fortune condition, and wants of the consumer. An expense, that may be authorized by the strictest economy in a person of moderate fortune, would, perhaps, be pitiful in a rich man, and absolute extravagance in a poor one. In a state of sickness, a man must allow himself indulgences, that he would not think of in health. An act of beneficence, that trenches on the personal enjoyments of the benefactor, is de- serving of the highest praise; but it would be highly blam- able, if done at the expense of his children’s subsistence. In respect to consumption, prodigality and avarice are the two faults to be avoided= both of them neutralize the benefits that wealth is calculated to confer on its possessor; prodigal- ity by exhausting, avarice by not using, the means of enjoy- ment. Prodigality is, indeed, the more amiable of the two, because it is allied to many amiable and social qualities. It is regarded with more indulgence, because it imparts its plea- sures to others; yet it is of the two the more mischievous to society; for it squanders and makes away with the capital that should be the support of industry; it destroys industry, the grand agent of production, by the destruction of the other agent, capital. If, by expense and consumption, are meant those kinds only which minister to our pleasures and luxu- ries, it is a great mistake to say that money is good for noth- ing but to be spent, and that products are only raised to be consumed. Money may be employed in the work of re-pro- duction; when so employed, it must be productive of great benefit; and, every time that a fixed capital is squandered, a corresponding quantity of industry must be extinguished, in some quarter or other. The spendthrift, in running through his fortune, is at the same time exhausting, pro tanto, the source of the profits upon industry. Economy is equally distant from avarice and profusion. Ava- rice hoards, not for the purpose of consuming or re-produc- ing, but for the mere sake of hoarding; it is a kind of instinct, or mechanical impulse, much to the discredit of those in whom it is detected= whereas, true economy is the offspring of pru- dence and sound rea son. and does not sacrifice necessaries to superfluities, like the miser when he denies himself present comforts, in the view of luxury, ex er prospective and never to be enjoyed. The most sumptuous entertainment may be conducted with economy, without diminishing, but rather adding to its splendour, which the slightest appearance of avarice would tarnish and deface. The economical man bal- ances his means against his present or future wants, and those of his family and friends, not forgetting the calls of humanity. The miser regards neither family nor friends; scarcely attends to his own personal wants, and is an utter stranger to those of mankind at large. Economy never consumes without an ob- ject; avarice never willingly consumes at all; the one is a so- ber and rational study, the only one that supplies the means of fulfilling our duties, and being at the same time just and gen- The miser, who, in the dread of losing his money, hesitates to turn it to account, does, indeed, nothing to promote the progress of industry; but at least he can not be said to reduce the means of production. His hoard is scraped together by the 220Book III= On Consumption erous; the other, a vile propensity to sacrifice every thing to the sordid consideration of self. impossible to employ in an absolute sense, terms, which al- ways of necessity convey an idea of relation and comparison. Economy has not unreasonably been ranked among the vir- tues of mankind; for, like the other virtues, it implies self- command and control; and is productive of the happiest con- sequences; the good education of children, physical and moral; the careful attendance of old age; the calmness of mind, so necessary to the good conduct of middle life; and that inde- pendence of circumstances which alone can secure against mercenary motives, are all referable to this quality. Without it there can be no liberality, none at least of a permanent and wholesome kind; for, when it degenerates into prodigality, it is an indiscriminate largess, alike to deserving and undeserv- ing; stinting those who have claims in favour of those who have none. It is common to see the spendthrift reduced to beg a favour from people that he has loaded with his bounty; for what he gives now, one expects a return will some day be called for; whereas, the gifts of the economical man are purely gratuitous; for he never gives except from his superfluities. The latter is rich with a moderate fortune; but the miser and the prodigal are poor, though in possession of the largest re- sources. The line of demarcation between necessaries and superflu- ities shifts with the fluctuating condition of society. Strictly speaking, mankind might exist upon roots and herbs, with a sheepskin for clothing, and a wigwam for lodging; yet, in the present state of European society, we cannot look upon bread or butcher’s meat, woollen clothes or houses of masonry, as luxuries. For the same reason, the line varies also according to the varying circumstances of individual fortune; what is a necessary in a large town, or in a particular line of life, may, in another line of life, or in the country, be a mere superfluity. Wherefore, it is impossible exactly to define the boundary between the one and the other. Smith has fixed it a little in advance of Stewart; including in the rank of necessaries, be- sides natural wants, such as the established rules of decency and propriety have made necessary in the lower classes of society. But Smith was wrong in attempting to fix at all what must, in the nature of things, be ever varying. Luxury may be said, in a general way, to be, the use or consumption of dear articles; for the term dear is one of relation, and therefore may be properly enough applied in the definition of another term, whose sense is likewise relative. Luxury 19 with us in France conveys the idea rather of ostentation than of sensual- ity; applied to dress, it denotes rather the superior beauty and impression upon the beholder, than superior convenience and comfort to the wearer; applied to the table, it means rather the splendour of a sumptuous banquet, than the exquisite farce of the solitary epicure. The grand aim of luxury in this sense is to attract admiration by the rarity, the costliness, and the magnificence of the objects displayed, recommended prob- ably neither by utility, not convenience, nor pleasurable quali- ties, but merely by their dazzling exterior and effect upon the opinions of mankind at large. Luxury conveys the idea of ostentation; but ostentation has itself a far more extensive meaning, and comprehends every quality assumed for the purpose of display. A man may be ostentatiously virtuous, but is never luxuriously so; for luxury im plies expense. Thus, luxury of wit or genius is a metaphorical expression, imply- ing a profuse display or expenditure, if it may be so called, of those qualities of the intellect, which it is the characteristic of good taste to deal out with a sparing hand. Economy is inconsistent with disorder, which stumbles blind- fold over wealth, sometimes missing what it most desires, although close within its reach, and sometimes seizing and devouring what it is most interested in preserving; ever im- pelled by the occurrences of the moment, which it either can not foresee, or can not emancipate itself from; and always unconscious of its own position, and utterly incapable of choosing the proper course for the future. A household, con- ducted without order, is preyed upon by all the world= neither the fidelity of the servants, nor even the parsimony of the master, can save it from ultimate ruin. For it is exposed to the perpetual recurrence of a variety of little outgoings, on every occasion, however trivial. 17 Among the motives that operate to determine the consump- tion of individuals, the most prominent is luxury, that fre- quent theme of declamation, which, however, I should prob- ably not have dwelt upon, could I expect that every body would take the trouble of applying the principles I have been labouring to establish; and were it not always useful to sub- stitute reason for declamation. Although, with us in France, what we term luxury is chiefly directed to ostentatious indulgence, the excess and refine- ment of sensuality are equally unjustifiable, and of precisely similar effect= that is to say, of a frivolous and inconsiderable enjoyment or satisfaction, obtained by a large consumption, calculated to satisfy more urgent and extensive wants. But I should not stigmatise as luxury that degree of variety or abun- dance, which a prudent and well-informed person in a civilised community would like to see upon his table upon domestic Luxury has been defined to be, the use of superfluities. 18 For my own part, I am at a loss to draw the line between superflu- ities and necessaries; the shades of difference are as indis- tinct and completely blended as the colours of the rainbow. Taste, education, temperament, bodily health, make the de- grees of utility and necessity infinitely variable, and render it 221Jean-Baptise Say, A Treatise on Political Economy and common occasions, or aim at in his dress and abode, when under no compulsion to keep up an appearance. I should call this degree of indulgence judicious and suitable to his condition, but not an instance of luxury. article of their creed. The merchants and manufacturers, who seldom look beyond the actual sale of their products, or in- quire into the causes which may operate to extend their sale, have warmly supported a position, apparently so consistent with their interests; the poets, who are ever apt to be seduced by appearances, and do not consider themselves bound to be wiser than politicians and men of business, have been loud in the praise of luxury; 20 and the rich have not been backward in adopting principles, that exalt their ostentation into a virtue, ana their self-gratification into benevolence. 21 Having thus defined the term luxury, we may go on to inves- tigate its effect upon the well-ordering or economy of na- tions. Under the head of unproductive consumption is comprised the satisfaction of many actual and urgent wants, which is a purpose of sufficient consequence to outweigh the mischief, that must ensue from the destruction of values. But what is there to compensate that mischief, where such consumption has not for its object the satisfaction of such wants? where money is spent for the mere sake of spending, and the value destroyed without any object beyond its destruction? This prejudice, however, must vanish as the increasing knowl- edge of political economy begins to reveal the real sources of wealth, the means of production, and the effect of consump- tion. Vanity may take pride in idle expense, but will ever be held in no less contempt by the wise, on account of its perni- cious effects, than it has been all along, for the motives by which it is actuated. It is supposed to be beneficial, at all events, to the producers of the articles consumed. But it is to be considered, that the same expenditure must take place, though not, perhaps, upon objects quite so frivolous; for the money withheld from luxu- rious indulgences, Is not absolutely thrown into the sea; it is sure to be spent either upon more judicious gratifications or upon reproduction. In one way or other, all the revenue, not absolutely sunk or buried, is consumed by the receiver of it, or by some one in his stead; and in all cases whatever, the encouragement held out by consumption to the producer is co-extensive with the total amount of revenue to be expended. Whence it follows: These conclusions of theory have been confirmed by experi- ence. Misery is the inseparable companion of luxury. The man of wealth and ostentation squanders upon costly trin- kets, sumptuous repasts, magnificent mansions, dogs, horses, and mistresses, a portion of value, which, vested in produc- tive occupation, would enable a multitude of willing labourers, whom his extravagance now consigns te idleness and misery, to provide themselves with warm clothing nourishing food, and household conveniences. The gold buckles of the rich man leave the poor one without shoes to his feet; and the labourer will want a shirt to his back, while his rich neighbour glitters in velvet and embroidery.

  1. That the encouragement which ostentatious extravagance affords to one class of production is necessarily withdrawn from another. It is vain to resist the nature of things. Magnificence may do what it will to keep poverty out of sight, yet it will cross it at every urn, still haunting, as if to reproach it for its excesses. This contrast was to be met with at Versailles, at Rome, at Madrid, and in every seat of royal residence. In a recent in- stance, it occurred in France in an afflicting degree, after a long series of extravagant and ostentatious administration; yet the principle is so undeniable, that one would not sup- pose it had required so terrible an illustration. 22
  2. That the encouragement resulting from this kind of con- sumption cannot increase, except in the event of an increase in the revenue of the consumers= which revenue, as we can not but know by this time, is not to be increased by luxurious, but solely by reproductive consumption. How great, then, must be the mistake of those, who, on ob- serving the obvious fact, that the production always equals the consumption, as it must necessarily do, since a thing can not be consumed before it is produced, have confounded the cause with the effect, and laid it down as a maxim, that con- sumption originates production; therefore that frugality is directly adverse to public prosperity, and that the most useful citizen is the one who spends the most. Those who are little in the habit of looking through the ap- pearance to the reality of things, are apt to be seduced by the glitter and the bustle of ostentatious luxury. They take the display of consumption as conclusive evidence of national prosperity. If they could open their eyes, they would see, that a nation verging towards decline will for some time continue to preserve a show of opulence; like the establishment of a spendthrift on the high road to ruin. But this false glare can not last long; the effort dries up the sources of reproduction, and, therefore, must infallibly be followed by a state of apa- thy and exhaustion of the political frame, which is only to be The partisans of the two opposite systems above adverted to, the economists, and the advocates of exclusive commerce, or the balance of trade, have made this maxim a fundamental 222Book III= On Consumption remedied by slow degrees, and by the adoption of a regimen the very reverse of that, by which it has thus been reduced. of authority to sell to folly and wickedness that patronage which it is his duty to dispense gratuitously to merit and to right. Pliny mentions having seen Paulina at a supper, dressed in a network of pearls and emeralds, that cost 40 millions of sestertii, 23 as she was ready to prove by her jeweller’s bills. It was bought with the fruit of her ancestor’s speculations. “Thus,” says the Roman writer, “it was to dress out his grand- daughter in jewels at an entertainment, that Lollius forgot him- self so far, as to lay waste whole provinces, to become the object of detestation to the Asiatics he governed, to forfeit the favour of Caesar, and end his life by poison.” It is distressing to see the fatal habits and customs of the na- tion one is attached to by birth, fortune, and social affection, extending their influence over the wisest individuals, and those best able to appreciate this danger and foresee its disastrous consequences. The number of persons, who have sufficient spirit and independence of fortune to act up to their prin- ciples, and set themselves forward as an example, is extremely small. Most men yield to the torrent, ana rush on ruin with their eyes open, in search of happiness; although it requires a very small share of philosophy to see the madness of this course, and to perceive, that, when once the common wants of nature are satisfied, happiness is to be found, not in the frivolous enjoyments of luxurious vanity, but in the moderate exercise of our physical and moral faculties. This is the kind of industry generated by love of display. If it be pretended, that a system, which encourages profu- sion, operates only upon the wealthy, and thus tends to a ben- eficial end, inasmuch as it reduces the evil of the inequality of fortune, there can be little difficulty in showing, that pro- fusion in the higher, begets a similar spirit in the middling and lower classes of society, which last must, of course, the soonest arrive at the limits of their income; so that, in fact, the universal profusion has the effect of increasing, instead of reducing, that inequality. Besides, the profusion of the wealthier class is always preceded, or followed, by that of the government, which must be fed and supplied by taxation, that is always sure to fall more heavily upon small incomes than on large ones. 24 Wherefore, those, who abuse great power, or talent, by exert- ing it in diffusing a taste for luxury, are the worst enemies of social happiness. If there is one habit,.that deserves more encouragement than another, in monarchies as well as repub- lics, in great as well as small, it is this of economy. Yet, after all, no encouragement is wanted; it is quite enough to with- draw favour and honour from habits of profusion; to afford inviolable security to all savings and acquirements; to give perfect freedom to their investment and occupation in every branch of industry, that is not absolutely criminal. The apologists of luxury have sometimes gone so far as to cry up the advantages of misery and indigence; on the ground, that, without the stimulus of want, the lower classes of man- kind could never be impelled to labour, so that neither the upper classes, nor society at large, could have the benefit of their exertions. It is alleged, that, to excite mankind to spend or consume, is to excite them to produce, inasmuch as they can only spend what they may acquire. This fallacy is grounded on the as- sumption, that production is equally within the ability of man- kind as consumption; that it is as easy to augment as to ex- pend one’s revenue. But, supposing it were so, nay further, that the desire to spend, begets a liking for labour, although experience by no means warrants such a conclusion, yet there can be no enlargement of production, without an augmenta- tion of capital, which is one of the necessary elements of pro- duction; but it is clear, that capital can only be accumulated by frugality; and how can that be expected from those, whose only stimulus to production is the desire of enjoyment. Happily, this position is as false in principle as it would be cruel in practice. Were nakedness a sufficient motive of exer- tion, the savage would be the most diligent and laborious, for he is the nearest to nakedness, of his species. Yet his indo- lence is equally notorious and incurable. Savages will often fret themselves to death, if compelled to work. It is observ- able throughout Europe, that the laziest nations are those near- est approaching to the savage state; a mechanic in good cir- cumstances, at London or Paris, would execute twice as much work in a given time, as the rude mechanic of a poor district. Wants multiply as fast as they are satisfied; a man who has a jacket is for having a coat; and, when he has his coat, he must have a greatcoat too. The artisan, that is lodged in an apart- ment by himself; extends his views to a second; if he has two shirts, he soon wants a dozen, for the comforts of more fre- quent change of linen; whereas, if he has none at all, he never feels the want of it. No man feels any disinclination to make Moreover, when the desire of acquirement is stimulated by the love of display, how can the slow and limited progress of real production keep pace with the ardour of that motive? Will it not find a shorter road to its object, in the rapid and disreputable profits of jobbing and intrigue, classes of indus- try most fatal to national welfare, because they produce noth- ing themselves, but only aim at appropriating a share of the produce of other people? It is this motive, that sets in motion the despicable art and cunning of the knave, leads the petti- fogger to speculate on the obscurity of the laws, and the man 223Jean-Baptise Say, A Treatise on Political Economy hending, that public consumption, or that which takes place for the general utility of the whole community, is precisely analogous to that consumption, which goes to satisfy the wants of individuals or families. In either case, there is a destruc- tion of values, and a loss of wealth; although, perhaps, not a shilling of specie goes out of the country. a further acquisition, in consequence of having made one al- ready. The comforts of the lower classes are, therefore, by no means incompatible with the existence of society, as too many have maintained. The shoemaker will make quite as good shoes in a warm room, with a good coat to his back, and wholesome food for himself and his family, as when perishing with cold in an open stall; he is not less skilful or inclined to work, because he has the reasonable conveniences of life. Linen is washed as well in England, where washing is carried on com- fortably within doors, as where it is executed in the nearest stream in the neighbourhood. By way of insuring conviction of the truth of this position, let us trace from first to last the passage of a product towards ultimate consumption on the public account. The government exacts from a tax-payer the payment of a given tax in the shape of money. To meet this demand, the tax-payer exchanges part of the products at his disposal for coin, which he pays to the tax-gatherer= 25 a second set of government agents is bus- ied in buying with that coin, cloth and other necessaries for the soldiery. Up to this point, there is no value lost or con- sumed= there has only been a gratuitous transfer of value, and a subsequent act of barter= but the value contributed by the subject still exists in the shape of stores and supplies in the military depot. In the end, however, this value is consumed; and then the portion of wealth, which passes from the hands of the tax-payer into those of the tax-gatherer, is destroyed and annihilated. It is time for the rich to abandon the puerile apprehension of losing the objects of their sensuality, if the poor man’s com- forts be promoted. On the contrary, reason and experience concur in teaching, that the greatest variety, abundance, and refinement of enjoyment are to be found in those countries, where wealth abounds most, and is the most widely diffused.

Yet it is not the sum of money that is destroyed= that has only passed from one hand to another, either without any return, as when it passed from the tax-payer to the tax-gatherer; or in exchange for an equivalent, as when it passed from the gov- ernment agent to the contractor for clothing and supplies. The value of the money survives the whole operation, and goes through three, four, or a dozen hands, without any sensible alteration; it is the value of the clothing and necessaries that disappears, with precisely the same effect, as if the tax-payer had, with the same money, purchased clothing and necessaries for his own private consumption. The sole difference is, that the individual in the one case, and the state in the other en- joys the satisfaction resulting from that consumption.

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