SECT. I.—: DEFINITION OF POLITICAL ECONOMY.

Political Economy1 may be defined to be the science of the laws which regulate the production, accumulation, distribution, and consumption of those articles or products that are necessary, useful, or agreeable to man, and which at the same time possess exchangeable value.

When it is said that an article or product is possessed of exchangeable value, it is meant that there are individuals disposed to give some quantity of labour, or of some other article or product, obtainable only by means of labour, in exchange for it.

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The power or capacity which particular articles or products have of satisfying one or more of the various wants and desires of which man is susceptible, constitutes their utility, and renders them objects of demand.

An article may be possessed of the highest degree of utility, or of power to minister to our wants and enjoyments, and may be universally made use of, without possessing exchangeable value. This is an attribute or quality of those articles only which it requires some portion of voluntary human labour to produce, procure, or preserve. Without utility of some kind or other, no article can ever become an object of demand; but how necessary soever an article may be to our comfort, or even existence, yet, if it be a spontaneous production of nature—if it exist independently of human agency—and if every one may command it in indefinite quantities, without any voluntary exertion or labour, it is destitute of value, and affords no basis for the reasonings of the economist. A commodity or product, is not valuable merely because it is useful or desirable; but it is valuable when, besides being possessed of these qualities, it can only be procured through the intervention of labour. It cannot justly be said, that the food with which we appease the cravings of hunger, or the clothes by which we defend ourselves from the inclemency of the weather, are more useful than atmospheric air; and yet they possess that exchangeable value of which the latter is wholly destitute. The reason is, that food and clothes are not, like air, gratuitous products; they cannot be had at all times, and in any quantity, without exertion; on the contrary, labour is always required for their production, or appropriation, or both; and as none will voluntarily sacrifice the fruits of their industry without receiving an equivalent, they are truly said to possess exchangeable value.

The economist does not investigate the laws which determine the production and distribution of such articles as exist, and may be obtained in unlimited quantities, independently of all voluntary human agency. The results of the industry Edition: current; Page: [3] of man are the only subjects that engage his attention. Political Economy might, indeed, be called the science of values; for, nothing destitute of exchangeable value, or which will not be received as an equivalent for something else which it has taken some labour to produce or obtain, can ever be properly brought within the scope of its inquiries.

The word value has, no doubt, been frequently employed to express, not only the exchangeable worth of a commodity, or its capacity of exchanging for other commodities, but also its utility, or capacity of satisfying our wants, or of contributing to our comforts and enjoyments. But it is obvious, that the utility of commodities—that the capacity of bread, for example, to appease hunger, and of water to quench thirst—is a totally different and distinct quality from their capacity of exchanging for other commodities. Adam Smith perceived this difference, and showed the importance of carefully distinguishing between utility, or, as he expressed it, “value in use,” and value in exchange. But he did not always keep this distinction in view, and it has been very often lost sight of by subsequent writers. The confounding of these opposite qualities has indeed been a principal cause of the confusion and obscurity in which many branches of the science, not in themselves difficult, are still involved. When, for example, it is said that water is valuable, the phrase has a very different meaning from what is attached to it when it is said that gold is valuable. Water is indispensable to existence, and has, therefore, a high degree of utility, or of “value in use;” but as it can generally be obtained in large quantities, without much labour or exertion, it has, in most places, a very low value in exchange. Gold, on the other hand, is of little utility; but as it exists only in limited quantities, and requires a great deal of labour for its production, it has a high exchangeable value, and may be exchanged or bartered for a proportionally large quantity of most other commodities. Those who confound qualities so different can hardly fail to Edition: current; Page: [4] arrive at the most erroneous conclusions. And hence, to avoid all chance of error from mistaking the sense of so important a word as value, we shall not use it except to signify exchangeable worth, or value in exchange; and shall always use the word utility to express the power or capacity of an article to satisfy our wants, or gratify our desires.

Political Economy has sometimes been termed “the science which treats of the production, distribution, and consumption of wealth;” and if by wealth be meant those useful or agreeable articles or products which possess exchangeable value, the definition would seem to be unexceptionable. If, however, the term wealth be understood in either a more enlarged or contracted sense, it will be faulty. Malthus, for example, has supposed wealth to be identical with “those material objects which are necessary, useful, and agreeable to man.”1 But the inaccuracy of this definition is evident, though we should waive the objections which may perhaps be justly taken to the introduction of the qualifying epithet “material.” In proof of this, it is sufficient to mention, that atmospheric air, and the heat of the sun, are both material, necessary, and agreeable products; though their independent existence, and their incapacity of appropriation, by depriving them of exchangeable value, place them, as already seen, without the pale of the science.

Adam Smith nowhere states the precise meaning he attached to the term wealth; but he most commonly describes it to be “the annual produce of land and labour.” Malthus, however, has justly objected to this definition, that it refers to the sources of wealth before it is known what wealth is, and that it includes all the useless products of the earth, as well as those appropriated and enjoyed by man.

The definition previously given does not seem to be open to any of these objections. By confining the science to a discussion of the laws regulating the production, accumulation, Edition: current; Page: [5] distribution, and consumption of articles or products possessed of exchangeable value, we give it a distinct and definite object. When thus properly restricted, the researches of the economist occupy a field exclusively his own. He runs no risk of wasting his time in inquiries which belong to other sciences, or in unprofitable investigations respecting the production and consumption of articles which cannot be appropriated, and which exist independently of human industry.

No article can be regarded as forming a portion of the wealth either of individuals or states, unless it be susceptible of appropriation. We shall, therefore, endeavour to employ the term wealth to distinguish such products only as are obtained by the intervention of human labour, and which, consequently, may be appropriated by one individual, and enjoyed exclusively by him. A man is not said to be wealthy because he has an indefinite command over atmospheric air, or over the articles with which he, in common with others, is gratuitously supplied by nature; for, this being a privilege which he enjoys along with every one else, it can form no ground of distinction: but he is said to be wealthy, according to the degree in which he can afford to command those necessaries, conveniences, and luxuries, that are not the gifts of nature, but the products of human industry.