An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith (ebook reader with highlighter txt) 📖

supply the effectual demand. The whole quantity brought

to market, therefore, may be disposed of to those who are willing to give

more than what is sufficient to pay the rent of the land which produced

them, together with the wages of the labour and the profits of the stock

which were employed in preparing and bringing them to market, according to

their natural rates. Such commodities may continue for whole centuries

together to be sold at this high price ; and that part of it which resolves

itself into the rent of land, is in this case the part which is generally

paid above its natural rate. The rent of the land which affords such

singular and esteemed productions, like the rent of some vineyards in France

of a peculiarly happy soil and situation, bears no regular proportion to the

rent of other equally fertile and equally well cultivated land in its

neighbourhood. The wages of the labour, and the profits of the stock

employed in bringing such commodities to market, on the contrary, are seldom

out of their natural proportion to those of the other employments of labour

and stock in their neighbourhood.

 

Such enhancements of the market price are evidently the effect of natural

causes, which may hinder the effectual demand from ever being fully

supplied, and which may continue, therefore, to operate for ever.

 

A monopoly granted either to an individual or to a trading company, has the

same effect as a secret in trade or manufactures. The monopolists, by

keeping the market constantly understocked by never fully supplying the

effectual demand, sell their commodities much above the natural price, and

raise their emoluments. whether they consist in wages or profit, greatly

above their natural rate.

 

The price of monopoly is upon every occasion the highest which can be got.

The natural price, or the price of free competition, on the contrary, is the

lowest which can be taken, not upon every occasion indeed, but for any

considerable time together. The one is upon every occasion the highest which

can be squeezed out of the buyers, or which it is supposed they will

consent to give; the other is the lowest which the sellers can commonly

afford to take, and at the same time continue their business.

 

The exclusive privileges of corporations, statutes of apprenticeship, and

all those laws which restrain in particular employments, the competition to

a smaller number than might otherwise go into them, have the same tendency,

though in a less degree. They are a sort of enlarged monopolies, and may

frequently, for ages together, and in whole classes of employments, keep up

the market price of particular commodities above the natural price, and

maintain both the wages of the labour and the profits of the stock employed

about them somewhat above their natural rate.

 

Such enhancements of the market price may last as long as the regulations of

policy which give occasion to them.

 

The market price of any particular commodity, though it may continue long

above, can seldom continue long below, its natural price. Whatever part of

it was paid below the natural rate, the persons whose interest it affected

would immediately feel the loss, and would immediately withdraw either so

much land or no much labour, or so much stock, from being employed about it,

that the quantity brought to market would soon be no more than sufficient to

supply the effectual demand. Its market price, therefore, would soon rise to

the natural price; this at least would be the case where there was perfect

liberty.

 

The same statutes of apprenticeship and other corporation laws, indeed,

which, when a manufacture is in prosperity, enable the workman to raise his

wages a good deal above their natural rate, sometimes oblige him, when it

decays, to let them down a good deal below it. As in the one case they

exclude many people from his employment, so in the other they exclude him

from many employments. The effect of such regulations, however, is not near

so durable in sinking the workman’s wages below, as in raising them above

their natural rate. Their operation in the one way may endure for many

centuries, but in the other it can last no longer than the lives of some of

the workmen who were bred to the business in the time of its prosperity.

When they are gone, the number of those who are afterwards educated to the

trade will naturally suit itself to the effectual demand. The policy must be

as violent as that of Indostan or ancient Egypt (where every man was bound

by a principle of religion to follow the occupation of his father, and was

supposed to commit the most horrid sacrilege if he changed it for another),

which can in any particular employment, and for several generations

together, sink either the wages of labour or the profits of stock below

their natural rate.

 

This is all that I think necessary to be observed at present concerning the

deviations, whether occasional or permanent, of the market price of

commodities from the natural price.

 

The natural price itself varies with the natural rate of each of its

component parts, of wages, profit, and rent; and in every society this rate

varies according to their circumstances, according to their riches or

poverty, their advancing, stationary, or declining condition. I shall, in

the four following chapters, endeavour to explain, as fully and distinctly

as I can, the causes of those different variations.

 

First, I shall endeavour to explain what are the circumstances which

naturally determine the rate of wages, and in what manner those

circumstances are affected by the riches or poverty, by the advancing,

stationary, or declining state of the society.

 

Secondly, I shall endeavour to shew what are the circumstances which

naturally determine the rate of profit ; and in what manner, too, those

circumstances are affected by the like variations in the state of the

society.

 

Though pecuniary wages and profit are very different in the different

employments of labour and stock ; yet a certain proportion seems commonly to

take place between both the pecuniary wages in all the different employments

of labour, and the pecuniary profits in all the different employments of

stock. This proportion, it will appear hereafter, depends partly upon the

nature of the different employments, and partly upon the different laws and

policy of the society in which they are carried on. But though in many

respects dependent upon the laws and policy, this proportion seems to be

little affected by the riches or poverty of that society, by its advancing,

stationary, or declining condition, but to remain the same, or very nearly

the same, in all those different states. I shall, in the third place,

endeavour to explain all the different circumstances which regulate this

proportion.

 

In the fourth and last place, I shall endeavour to shew what are the

circumstances which regulate the rent of land, and which either raise or

lower the real price of all the different substances which it produces.

 

CHAPTER VIII.

 

OF THE WAGES OF LABOUR.

 

The produce of labour constitutes the natural recompence or wages of labour.

 

In that original state of things which precedes both the appropriation of

land and the accumulation of stock, the whole produce of labour belongs to

the labourer. He has neither landlord nor master to share with him.

 

Had this state continued, the wages of labour would have augmented with all

those improvements in its productive powers, to which the division of labour

gives occasion. All things would gradually have become cheaper. They would

have been produced by a smaller quantity of labour ; and as the commodities

produced by equal quantities of labour would naturally in this state of

things be exchanged for one another, they would have been purchased likewise

with the produce of a smaller quantity.

 

But though all things would have become cheaper in reality, in appearance

many things might have become dearer, than before, or have been exchanged

for a greater quantity of other goods. Let us suppose, for example, that in

the greater part of employments the productive powers of labour had been

improved to tenfold, or that a day’s labour could produce ten times the

quantity of work which it had done originally ; but that in a particular

employment they had been improved only to double, or that a day’s labour

could produce only twice the quantity of work which it had done before. In

exchanging the produce of a day’s labour in the greater part of employments

for that of a day’s labour in this particular one, ten times the original

quantity of work in them would purchase only twice the original quantity in

it. Any particular quantity in it, therefore, a pound weight, for example,

would appear to be five times dearer than before. In reality, however, it

would be twice as cheap. Though it required five times the quantity of other

goods to purchase it, it would require only half the quantity of labour

either to purchase or to produce it. The acquisition, therefore, would be

twice as easy as before.

 

But this original state of things, in which the labourer enjoyed the whole

produce of his own labour, could not last beyond the first introduction of

the appropriation of land and the accumulation of stock. It was at an end,

therefore, long before the most considerable improvements were made in the

productive powers of labour ; and it would be to no purpose to trace further

what might have been its effects upon the recompence or wages of labour.

 

As soon as land becomes private property, the landlord demands a share of

almost all the produce which the labourer can either raise or collect from

it. His rent makes the first deduction from the produce of the labour which

is employed upon land.

 

It seldom happens that the person who tills the ground has wherewithal to

maintain himself till he reaps the harvest. His maintenance is generally

advanced to him from the stock of a master, the farmer who employs him, and

who would have no interest to employ him, unless he was to share in the

produce of his labour, or unless his stock was to be replaced to him with a

profit. This profit makes a second deduction from the produce of the labour

which is employed upon land.

 

The produce of almost all other labour is liable to the like deduction of

profit. In all arts and manufactures, the greater part of the workmen stand

in need of a master, to advance them the materials of their work, and their

wages and maintenance, till it be completed. He shares in the produce of

their labour, or in the value which it adds to the materials upon which it

is bestowed; and in this share consists his profit.

 

It sometimes happens, indeed, that a single independent workman has stock

sufficient both to purchase the materials of his work, and to maintain

himself till it be completed. He is both master and workman, and enjoys the

whole produce of his own labour, or the whole value which it adds to the

materials upon which it is bestowed. It includes what are usually two

distinct revenues, belonging to two distinct persons, the profits of stock,

and the wages of labour.

 

Such cases, however, are not very frequent; and in every part of Europe

twenty workmen serve under a master for one that is independent, and the

wages of labour are everywhere understood to be, what they usually are, when

the labourer is one person, and the owner of the stock which employs him

another.

 

What are the common wages of labour, depends everywhere upon the contract

usually made between those two parties, whose interests are