When the price of any commodity is neither more nor less than what is sufficient to pay the rent of the land， the wages of the labour， and the profits of the stock employed in raising， preparing， and bringing it to market， according to their natural rates， the commodity is then sold for what may be called its natural price.
The commodity is then sold precisely for what it is worth， or for what it really costs the person who brings it to market； for though in common language what is called the prime cost of any commodity does not comprehend the profit of the person who is to sell it again， yet if he sell it at a price which does not allow him the ordinary rate of profit in his neighbourhood， he is evidently a loser by the trade； since by employing his stock in some other way he might have made that profit. His profit， besides， is his revenue， the proper fund of his subsistence. As， while he is preparing and bringing the goods to market， he advances to his workmen their wages， or their subsistence； so he advances to himself， in the same manner， his own subsistence， which is generally suitable to the profit which he may reasonably expect from the sale of his goods. Unless they yield him this profit， therefore， they do not repay him what they may very properly be said to have really cost him.
Though the price， therefore， which leaves him this profit is not always the lowest at which a dealer may sometimes sell his goods， it is the lowest at which he is likely to sell them for any considerable time； at least where there is perfect liberty， or where he may change his trade as often as he pleases.
The actual price at which any commodity is commonly sold is called its market price. It may either be above， or below， or exactly the same with its natural price.
The market price of every particular commodity is regulated by the proportion between the quantity which is actually brought to market， and the demand of those who are willing to pay the natural price of the commodity， or the whole value of the rent， labour， and profit， which must be paid in order to bring it thither. Such people may be called the effectual demanders， and their demand the effectual demand； since it may be sufficient to effectuate the bringing of the commodity to market. It is different from the absolute demand. A very poor man may be said in some sense to have a demand for a coach and six； he might like to have it； but his demand is not an effectual demand， as the commodity can never be brought to market in order to satisfy it.
When the quantity of any commodity which is brought to market falls short of the effectual demand， all those who are willing to pay the whole value of the rent， wages， and profit， which must be paid in order to bring it thither， cannot be supplied with the quantity which they want. Rather than want it altogether， some of them will be willing to give more. A competition will immediately begin among them， and the market price will rise more or less above the natural price， according as either the greatness of the deficiency， or the wealth and wanton luxury of the competitors， happen to animate more or less the eagerness of the competition. Among competitors of equal wealth and luxury the same deficiency will generally occasion a more or less eager competition， according as the acquisition of the commodity happens to be of more or less importance to them. Hence the exorbitant price of the necessaries of life during the blockade of a town or in a famine.
When the quantity brought to market exceeds the effectual demand， it cannot be all sold to those who are willing to pay the whole value of the rent， wages， and profit， which must be paid in order to bring it thither. Some part must be sold to those who are willing to pay less， and the low price which they give for it must reduce the price of the whole. The market price will sink more or less below the natural price， according as the greatness of the excess increases more or less the competition of the sellers， or according as it happens to be more or less important to them to get immediately rid of the commodity. The same excess in the importation of perishable， will occasion a much greater competition than in that of durable commodities； in the importation of oranges， for example， than in that of old iron.
When the quantity brought to market is just sufficient to supply the effectual demand， and no more， the market price naturally comes to be either exactly， or as nearly as can be judged of， the same with the natural price. The whole quantity upon hand can be disposed of for this price， and cannot be disposed of for more. The competition of the different dealers obliges them all to accept of this price， but does not oblige them to accept of less.
The quantity of every commodity brought to market naturally suits itself to the effectual demand. It is the interest of all those who employ their land， labour， or stock， in bringing any commodity to market， that the quantity never should exceed the effectual demand； and it is the interest of all other people that it never should fall short of that demand.
If at any time it exceeds the effectual demand， some of the component parts of its price must be paid below their natural rate. If it is rent， the interest of the landlords will immediately prompt them to withdraw a part of their land； and if it is wages or profit， the interest of the labourers in the one case， and of their employers in the other， will prompt them to withdraw a part of their labour or stock from this employment. The quantity brought to market will soon be no more than sufficient to supply the effectual demand. All the different parts of its price will rise to their natural rate， and the whole price to its natural price.
If， on the contrary， the quantity brought to market should at any time fall short of the effectual demand， some of the component parts of its price must rise above their natural rate. If it is rent， the interest of all other landlords will naturally prompt them to prepare more land for the raising of this commodity； if it is wages or profit， the interest of all other labourers and dealers will soon prompt them to employ more labour and stock in preparing and bringing it to market. The quantity brought thither will soon be sufficient to supply the effectual demand. All the different parts of its price will soon sink to their natural rate， and the whole price to its natural price.
The natural price， therefore， is， as it were， the central price， to which the prices of all commodities are continually gravitating. Different accidents may sometimes keep them suspended a good deal above it， and sometimes force them down even somewhat below it. But whatever may be the obstacles which hinder them from settling in this centre of repose and continuance， they are constantly tending towards it.
The whole quantity of industry annually employed in order to bring any commodity to market naturally suits itself in this manner to the effectual demand. It naturally aims at bringing always that precise quantity thither which may be sufficient to supply， and no more than supply， that demand.
But in some employments the same quantity of industry will in different years produce very different quantities of commodities； while in others it will produce always the same， or very nearly the same. The same number of labourers in husbandry will， in different years， produce very different quantities of corn， wine， oil， hops， etc. But the same number of spinners and weavers will every year produce the same or very nearly the same quantity of linen and woollen cloth. It is only the average produce of the one species of industry which can be suited in any respect to the effectual demand； and as its actual produce is frequently much greater and frequently much less than its average produce， the quantity of the commodities brought to market will sometimes exceed a good deal， and sometimes fall short a good deal， of the effectual demand. Even though that demand therefore should continue always the same， their market price will be liable to great fluctuations， will sometimes fall a good deal below， and sometimes rise a good deal above their natural price. In the other species of industry， the produce of equal quantities of labour being always the same， or very nearly the same， it can be more exactly suited to the effectual demand. While that demand continues the same， therefore， the market price of the commodities is likely to do so too， and to be either altogether， or as nearly as can be judged of， the same with the natural price. That the price of linen and woollen cloth is liable neither to such frequent nor to such great variations as the price of corn， every mans experience will inform him. The price of the one species of commodities varies only with the variations in the demand: that of the other varies， not only with the variations in the demand， but with the much greater and more frequent variations in the quantity of what is brought to market in order to supply that demand.
The occasional and temporary fluctuations in the market price of any commodity fall chiefly upon those parts of its price which resolve themselves into wages and profit. That part which resolves itself into rent is less affected by them. A rent certain in money is not in the least affected by them either in its rate or in its value. A rent which consists either in a certain proportion or in a certain quantity of the rude produce， is no doubt affected in its yearly value by all the occasional and temporary fluctuations in the market price of that rude produce； but it is seldom affected by them in its yearly rate. In settling the terms of the lease， the landlord and farmer endeavour， according to their best judgment， to adjust that rate， not to the temporary and occasional， but to the average and ordinary price of the produce.
Such fluctuations affect both the value and the rate either of wages or of profit， according as the market happens to be either overstocked or understocked with commodities or with labour； with work done， or with work to be done. A public mourning raises the price of black cloth (with which the market is almost always understocked upon such occasions)， and augments the profits of the merchants who possess any considerable quantity of it. It has no effect upon the wages of the weavers. The market is understocked with commodities， not with labour； with work done， not with work to be done. It raises the wages of journeymen tailors. The market is here understocked with labour. There is an effectual demand for more labour， for more work to be done than can be had. It sinks the price of coloured silks and cloths， and thereby reduces the profits of the merchants who have any considerable quantity of them upon hand. It sinks， too， the wages of the workmen employed in preparing such commodities， for which all demand is stopped for six months， perhaps for a twelvemonth. The market is here overstocked both with commodities and with labour.
But though the market price of every particular commodity is in this manner continually gravitating， if one may say so， towards the natural price， yet sometimes particular accidents， sometimes natural causes， and sometimes particular regulations of police， may， in many commodities， keep up the market price， for a long time together， a good deal above the natural price.
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Book Three: Of the different progress of opulence in different nations
Chapter Ⅰ
Of the natural progress of opulence
The great commerce of every civilised society is that carried on between the inhabitants of the town and those of the country. It consists in the exchange of rude for manufactured produce， either immediately， or by the intervention of money， or of some sort of paper which represents money. The country supplies the town with the means of subsistence and the materials of manufacture. The town repays this supply by sending back a part of the manufactured produce to the inhabitants of the country. The town， in which there neither is nor can be any reproduction of substances， may very properly be said to gain its whole wealth and subsistence from the country. We must not， however， upon this account， imagine that the gain of the town is the loss of the country. The gains of both are mutual and reciprocal， and the division of labour is in this， as in all other cases， advantageous to all the different persons employed in the various occupations into which it is subdivided. The inhabitants of the country purchase of the town a greater quantity of manufactured goods， with the produce of a much smaller quantity of their own labour， than they must have employed had they attempted to prepare them themselves. The town affords a market for the surplus produce of the country， or what is over and above the maintenance of the cultivators， and it is there that the inhabitants of the country exchange it for something else which is in demand among them. The greater the number and revenue of the inhabitants of the town， the more extensive is the market which it affords to those of the country； and the more extensive that market， it is always the more advantageous to a great number. The corn which grows within a mile of the town sells there for the same price with that which comes from twenty miles distance. But the price of the latter must generally not only pay the expense of raising and bringing it to market， but afford， too， the ordinary profits of agriculture to the farmer. The proprietors and cultivators of the country， therefore， which lies in the neighbourhood of the town， over and above the ordinary profits of agriculture， gain， in the price of what they sell， the whole value of the carriage of the like produce that is brought from more distant parts， and they have， besides， the whole value of this carriage in the price of what they buy. Compare the cultivation of the lands in the neighbourhood of any considerable town with that of those which lie at some distance from it， and you will easily satisfy yourself how much the country is benefited by the commerce of the town. Among all the absurd speculations that have been propagated concerning the balance of trade， it has never been pretended that either the country loses by its commerce with the town， or the town by that with the country which maintains it.
As subsistence is， in the nature of things， prior to conveniency and luxury， so the industry which procures the former must necessarily be prior to that which ministers to the latter. The cultivation and improvement of the country， therefore， which affords subsistence， must， necessarily， be prior to the increase of the town， which furnishes only the means of conveniency and luxury. It is the surplus produce of the country only， or what is over and above the maintenance of the cultivators， that constitutes the subsistence of the town， which can therefore increase only with the increase of this surplus produce. The town， indeed， may not always derive its whole subsistence from the country in its neighbourhood， or even from the territory to which it belongs， but from very distant countries； and this， though it forms no exception from the general rule， has occasioned considerable variations in the progress of opulence in different ages and nations.
That order of things which necessity imposes in general， though not in every particular country， is， in every particular country， promoted by the natural inclinations of man. If human institutions had never thwarted those natural inclinations， the towns could nowhere have increased beyond what the improvement and cultivation of the territory in which they were situated could support； till such time， at least， as the whole of that territory was completely cultivated and improved. Upon equal， or nearly equal profits， most men will choose to employ their capitals rather in the improvement and cultivation of land than either in manufactures or in foreign trade. The man who employs his capital in land has it more under his view and command， and his fortune is much less liable to accidents than that of the trader， who is obliged frequently to commit it， not only to the winds and the waves， but to the more uncertain elements of human folly and injustice， by giving great credits in distant countries to men with whose character and situation he can seldom be thoroughly acquainted. The capital of the landlord， on the contrary， which is fixed in the improvement of his land， seems to be as well secured as the nature of human affairs can admit of. The beauty of the country besides， the pleasures of a country life， the tranquillity of mind which it promises， and wherever the injustice of human laws does not disturb it， the independency which it really affords， have charms that more or less attract everybody； and as to cultivate the ground was the original destination of man， so in every stage of his existence he seems to retain a predilection for this primitive employment.
Without the assistance of some artificers， indeed， the cultivation of land cannot be carried on but with great inconveniency and continual interruption. Smiths， carpenters， wheelwrights， and ploughwrights， masons， and bricklayers， tanners， shoemakers， and tailors are people whose service the farmer has frequent occasion for.
Such artificers， too， stand occasionally in need of the assistance of one another； and as their residence is not， like that of the farmer， necessarily tied down to a precise spot， they naturally settle in the neighbourhood of one another， and thus form a small town or village. The butcher， the brewer， and the baker soon join them， together with many other artificers and retailers， necessary or useful for supplying their occasional wants， and who contribute still further to augment the town. The inhabitants of the town and those of the country are mutually the servants of one another. The town is a continual fair or market， to which the inhabitants of the country resort in order to exchange their rude for manufactured produce. It is this commerce which supplies the inhabitants of the town both with the materials of their work， and the means of their subsistence. The quantity of the finished work which they sell to the inhabitants of the country necessarily regulates the quantity of the materials and provisions which they buy. Neither their employment nor subsistence， therefore， can augment but in proportion to the augmentation of the demand from the country for finished work； and this demand can augment only in proportion to the extension of improvement and cultivation.
Had human institutions， therefore， never disturbed the natural course of things， the progressive wealth and increase of the towns would， in every political society， be consequential， and in proportion to the improvement and cultivation of the territory or country.
In our North American colonies， where uncultivated land is still to be had upon easy terms， no manufactures for distant sale have ever yet been established in any of their towns. When an artificer has acquired a little more stock than is necessary for carrying on his own business in supplying the neighbouring country， he does not， in North America， attempt to establish with it a manufacture for more distant sale， but employs it in the purchase and improvement of uncultivated land. From artificer he becomes planter， and neither the large wages nor the easy subsistence which that country affords to artificers can bribe him rather to work for other people than for himself. He feels that an artificer is the servant of his customers， from whom he derives his subsistence； but that a planter who cultivates his own land， and derives his necessary subsistence from the labour of his own family， is really a master， and independent of all the world.
In countries， on the contrary， where there is either no uncultivated land， or none that can be had upon easy terms， every artificer who has acquired more stock than he can employ in the occasional jobs of the neighbourhood endeavours to prepare work for more distant sale. The smith erects some sort of iron， the weaver some sort of linen or woollen manufactory. Those different manufactures come， in process of time， to be gradually subdivided， and thereby improved and refined in a great variety of ways， which may easily be conceived， and which it is therefore unnecessary to explain any further.
In seeking for employment to a capital， manufactures are， upon equal or nearly equal profits， naturally preferred to foreign commerce， for the same reason that agriculture is naturally preferred to manufactures. As the capital of the landlord or farmer is more secure than that of the manufacturer， so the capital of the manufacturer， being at all times more within his view and command， is more secure than that of the foreign merchant. In every period， indeed， of every society， the surplus part both of the rude and manufactured produce， or that for which there is no demand at home， must be sent abroad in order to be exchanged for something for which there is some demand at home. But whether the capital， which carries this surplus produce abroad， be a foreign or a domestic one is of very little importance. If the society has not acquired sufficient capital both to cultivate all its lands， and to manufacture in the completest manner the whole of its rude produce， there is even a considerable advantage that rude produce should be exported by a foreign capital， in order that the whole stock of the society may be employed in more useful purposes. The wealth of ancient Egypt， that of China and Indostan， sufficiently demonstrate that a nation may attain a very high degree of opulence though the greater part of its exportation trade be carried on by foreigners. The progress of our North American and West Indian colonies would have been much less rapid had no capital but what belonged to themselves been employed in exporting their surplus produce.
According to the natural course of things， therefore， the greater part of the capital of every growing society is， first， directed to agriculture， afterwards to manufactures， and last of all to foreign commerce. This order of things is so very natural that in every society that had any territory it has always， I believe， been in some degree observed. Some of their lands must have been cultivated before any considerable towns could be established， and some sort of coarse industry of the manufacturing kind must have been carried on in those towns， before they could well think of employing themselves in foreign commerce.
But though this natural order of things must have taken place in some degree in every such society， it has， in all the modern states of Europe， been， in many respects， entirely inverted. The foreign commerce of some of their cities has introduced all their finer manufactures， or such as were fit for distant sale； and manufactures and foreign commerce together have given birth to the principal improvements of agriculture. The manners and customs which the nature of their original government introduced， and which remained after that government was greatly altered， necessarily forced them into this unnatural and retrograde order.
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Book Four: Of systems of political economy
Chapter Ⅰ
Of the principle of the commercial， or mercantile system
That wealth consists in money， or and silver， is a popular notion which naturally arises from the double function of money， as the instrument of commerce and as the measure of value. In consequence of its being the instrument of commerce， when we have money we can more readily obtain whatever else we have occasion for than by means of any other commodity. The great affair， we always find， is to get money. When that is obtained， there is no difficulty in making any subsequent purchase. In consequence of its being the measure of value， we estimate that of all other commodities by the quantity of money which they will exchange for. We say of a rich man that he is worth a great deal， and of a poor man that he is worth very little money. A frugal man， or a man eager to be rich， is said to love money； and a careless， a generous， or a profuse man， is said to be indifferent about it. To grow rich is to get money； and wealth and money， in short， are， in common language， considered as in every respect synonymous.
A rich country， in the same manner as a rich man， is supposed to be a country abounding in money； and to heap up gold and saver in any country is supposed to be the readiest way to enrich it. For some time after the discovery of America， the first inquiry of the Spaniards， when they arrived upon an unknown coast， used to be， if there was any gold or silver to be found in the neighbourhood. By the information which they received， they judged whether it was worth while to make a settlement there， or if the country was worth the conquering. Plano Carpino， a monk， sent ambassador from the King of France to one of the sons of the famous Genghis Khan， says that the Tartars used frequently to ask him if there was plenty of sheep and oxen in the kingdom of France. Their inquiry had the same object with that of the Spaniards. They wanted to know if the country was rich enough to be worth the conquering. Among the Tartars， as among all other nations of shepherds， who are generally ignorant of the use of money， cattle are the instruments of commerce and the measures of value. Wealth， therefore， according to them， consisted in cattle， as according to the Spaniards it consisted in gold and silver. Of the two， the Tartar notion， perhaps， was the nearest to the truth.
Mr. Locke remarks a distinction between money and other movable goods. All other movable goods， he says， are of so consumable a nature that the wealth which consists in them cannot be much depended on， and a nation which abounds in them one year may， without any exportation， but merely their own waste and extravagance， be in great want of them the next. Money， on the contrary， is a steady friend， which， though it may travel about from hand to hand， yet if it can be kept from going out of the country， is not very liable to be wasted and consumed. Gold and silver， therefore， are， according to him， the most solid and substantial part of the movable wealth of a nation， and to multiply those metals ought， he thinks， upon that account， to be the great object of its political economy.
Others admit that if a nation could be separated from all the world， it would be of no consequence how much， or how little money circulated in it. The consumable goods which were circulated by means of this money would only be exchanged for a greater or a smaller number of pieces； but the real wealth or poverty of the country， they allow， would depend altogether upon the abundance or scarcity of those consumable goods. But it is otherwise， they think， with countries which have connections with foreign nations， and which are obliged to carry on foreign wars， and to maintain fleets and armies in distant countries. This， they say， cannot be done but by sending abroad money to pay them with； and a nation cannot send much money abroad unless it has a good deal at home. Every such nation， therefore， must endeavour in time of peace to accumulate gold and silver that， when occasion requires， it may have wherewithal to carry on foreign wars.
In consequence of these popular notions， all the different nations of Europe have studied， though to little purpose， every possible means of accumulating gold and silver in their respective countries. Spain and Portugal， the proprietors of the principal mines which supply Europe with those metals， have either prohibited their exportation under the severest penalties， or subjected it to a considerable duty. The like prohibition seems anciently to have made a part of the policy of most other European nations. It is even to be found， where we should least of all expect to find it， in some old Scotch acts of Parliament， which forbid under heavy penalties the carrying gold or silver forth of the kingdom. The like policy anciently took place both in France and England.
When those countries became commercial， the merchants found this prohibition， upon many occasions， extremely inconvenient. They could frequently buy more advantageously with gold and silver than with any other commodity the foreign goods which they wanted， either to import into their own， or to carry to some other foreign country. They remonstrated， therefore， against this prohibition as hurtful to trade.
They represented， first， that the exportation of gold and silver in order to purchase foreign goods， did not always diminish the quantity of those metals in the kingdom. That， on the contrary， it might frequently increase that quantity； because， if the consumption of foreign goods was not thereby increased in the country， those goods might be reexported to foreign countries， and， being there sold for a large profit， might bring back much more treasure than was originally sent out to purchase them. Mr. Mun compares this operation of foreign trade to the seedtime and harvest of agriculture. “If we only behold，” says he， “the actions of the husbandman in the seedtime， when he casteth away much good corn into the ground， we shall account him rather a madman than a husbandman. But when we consider his labours in the harvest， which is the end of his endeavours， we shall find the worth and plentiful increase of his action.”
They represented， secondly， that this prohibition could not hinder the exportation of gold and silver， which， on account of the smallness of their bulk in proportion to their value， could easily be smuggled abroad. That this exportation could only be prevented by a proper attention to， what they called， the balance of trade. That when the country exported to a greater value than it imported， a balance became due to it from foreign nations， which was necessarily paid to it in gold and silver， and thereby increased the quantity of those metals in the kingdom. But that when it imported to a greater value than it exported， a contrary balance became due to foreign nations， which was necessarily paid to them in the same manner， and thereby diminished that quantity. That in this case to prohibit the exportation of those metals could not prevent it， but only， by making it more dangerous， render it more expensive. That the exchange was thereby turned more against the country which owed the balance than it otherwise might have been； the merchant who purchased a bill upon the foreign country being obliged to pay the banker who sold it， not only for the natural risk， trouble， and expense of sending the money thither， but for the extraordinary risk arising from the prohibition. But that the more the exchange was against any country， the more the balance of trade became necessarily against it； the money of that country becoming necessarily of so much less value in comparison with that of the country to which the balance was due. That if the exchange between England and Holland， for example， was five per cent against England， it would require a hundred and five ounces of silver in England to purchase a bill for a hundred ounces of silver in Holland: that a hundred and five ounces of silver in England， therefore， would be worth only a hundred ounces of silver in Holland， and would purchase only a proportionable quantity of Dutch goods； but that a hundred ounces of silver in Holland， on the contrary， would be worth a hundred and five ounces in England， and would purchase a proportionable quantity of English goods: that the English goods which were sold to Holland would be sold so much cheaper； and the Dutch goods which were sold to England so much dearer by the difference of the exchange； that the one would draw so much less Dutch money to England， and the other so much more English money to Holland， as this difference amounted to: and that the balance of trade， therefore， would necessarily be so much more against England， and would require a greater balance of gold and silver to be exported to Holland.
Those arguments were partly solid and partly sophistical.
They were solid so far as they asserted that the exportation of gold and silver in trade might frequently be advantageous to the country. They were solid， too， in asserting that no prohibition could prevent their exportation when private people found any advantage in exporting them.
But they were sophistical in supposing that either to preserve or to augment the quantity of those metals required more the attention of government than to preserve or to augment the quantity of any other useful commodities， which the freedom of trade， without any such attention， never fails to supply in the proper quantity.
They were sophistical too， perhaps， in asserting that the high price of exchange necessarily increased what they called the unfavourable balance of trade， or occasioned the exportation of a greater quantity of gold and silver. That high price， indeed， was extremely disadvantageous to the merchants who had any money to pay in foreign countries. They paid so much dearer for the bills which their bankers granted them upon those countries. But though the risk arising from the prohibition might occasion some extraordinary expense to the bankers， it would not necessarily carry any more money out of the country. This expense would generally be all laid out in the country， in smuggling the money out of it， and could seldom occasion the exportation of a single sixpence beyond the precise sum drawn for. The high price of exchange too would naturally dispose the merchants to endeavour to make their exports nearly balance their imports， in order that they might have this high exchange to pay upon as small a sum as possible. The high price of exchange， besides， must necessarily have operated as a tax， in raising the price of foreign goods， and thereby diminishing their consumption. It would tend， therefore， not to increase but to diminish what they called the unfavourable balance of trade， and consequently the exportation of gold and silver.
Such as they were， however， those arguments convinced the people to whom they were addressed. They were addressed by merchants to parliaments and to the councils of princes， to nobles and to country gentlemen， by those who were supposed to understand trade to those who were conscious to themselves that they knew nothing about the matter. That foreign trade enriched the country， experience demonstrated to the nobles and country gentlemen as well as to the merchants； but how， or in what manner， none of them well knew. The merchants knew perfectly in what manner it enriched themselves. It was their business to know it. But to know in what manner it enriched the country was no part of their business. This subject never came into their consideration but when they had occasion to apply to their country for some change in the laws relating to foreign trade.
It then became necessary to say something about the beneficial effects of foreign trade， and the manner in which those effects were obstructed by the laws as they then stood. To the judges who were to decide the business it appeared a most satisfactory account of the matter， when they were told that foreign trade brought money into the country， but that the laws in question hindered it from bringing so much as it otherwise would do. Those arguments therefore produced the wishedfor effect. The prohibition of exporting gold and silver was in France and England confined to the coin of those respective countries. The exportation of foreign coin and of bullion was made free. In Holland， and in some other places， this liberty was extended even to the coin of the country. The attention of government was turned away from guarding against the exportation of gold and silver to watch over the balance of trade as the only cause which could occasion any augmentation or diminution of those metals.
From one fruitless care it was turned away to another care much more intricate， much more embarrassing， and just equally fruitless. The title of Muns book， Englands Treasure in Foreign Trade， became a fundamental maxim in the political economy， not of England only， but of all other commercial countries. The inland or home trade， the most important of all， the trade in which an equal capital affords the greatest revenue， and creates the greatest employment to the people of the country， was considered as subsidiary only to foreign trade. It neither brought money into the country， it was said， nor carried any out of it. The country， therefore， could never become either richer or poorer by means of it， except so far as its prosperity or decay might indirectly influence the state of foreign trade.
A country that has no mines of its own must undoubtedly draw its gold and silver from foreign countries in the same manner as one that has no vineyards of its own must draw its wines. It does not seem necessary， however， that the attention of government should be more turned towards the one than towards the other object. A country that has wherewithal to buy wine will always get the wine which it has occasion for； and a country that has wherewithal to buy gold and silver will never be in want of those metals. They are to be bought for a certain price like all other commodities， and as they are the price of all other commodities， so all other commodities are the price of those metals. We trust with perfect security that the freedom of trade， without any attention of government， will always supply us with the wine which we have occasion for: and we may trust with equal security that it will always supply us with all the gold and silver which we can afford to purchase or to employ， either in circulating our commodities， or in other uses.
Questions
1. What is the market price of the commodity? How does it differ from its natural price?
2. What is Adam Smiths stance on the statement that the gain of the town is the loss of the country?
3. In Adam Smiths view， how should the greater part of the capital in a growing society be directed， in priority order， to manufactures， foreign commerce， and agriculture?
4. According to Adam Smith， what is the double function of money?
5. In Adam Smiths words， what is the difference between money and other movable goods， according to Locke?
On LibertyJohn Stuart MillPrereading
John Stuart Mill (18061873)， a British philosopher， political economist， and civil servant， is one of the most influential thinkers in the history of classical liberalism. He contributed enormously to liberal thought by combining elements of classical liberalism with what eventually became known as the new liberalism. As a member of the Liberal Party， Mill was also the second Member of Parliament to call for womens suffrage after Henry Hunt in 1832. His substantial corpus of works includes texts in logic， epistemology， economics， social and political philosophy， ethics， metaphysics， religion， and current affairs. Among his most wellknown and significant are A System of Logic， Principles of Political Economy， On Liberty， Utilitarianism， The Subjection of Women， Three Essays on Religion， and his Autobiography.
On Liberty (1859)， one of the classic texts in liberal philosophy， addresses the nature and limits of the power that can be exercised by society over the individual. In perhaps his most passionate work， Mill writes about the rights of individuals to do what they wish with their own life as long as the ramifications from their actions dont harm other people. This type of advocacy for an autonomous life for all citizens is typical of Mills utilitarian beliefs. Utilitarianism supports each person having the ability to maximize their own utility (happiness) as long as they dont negatively affect others on their path to happiness. And as to Mills conception of happiness， he holds that “By happiness is intended pleasure， and the absence of pain； by unhappiness， pain， and the privation of pleasure.” That statement has seemed to commit Mill， at a basic level， to hedonism as an account of happiness and a theory of value—that it is pleasurable sensations that are the ultimately valuable thing. From here， one can see the limitation or even fallacy of Mills interpretation of both freedom and happiness. Thus， a critical perspective and reflection will be needed in our exploration of Mills liberal ideas.
The essay On Liberty consists of five chapters. In Chapter Ⅰ， Mill begins by explaining that his purpose is to discuss the maximum power that society can exercise over an individual and study the struggle between Liberty and Authority. And one can see Mills strong and even extreme aversion to conformity in the first chapter， which will play an important role in the whole essay. Thus， critical thinking is a necessity during reading and analyzing Mills extreme notions of liberty.
In Chapter Ⅱ，Mills ideas on society are tempered with his views on religion. Indeed， probably the most interesting aspect of Mills work in this chapter is his views on religion. He doesnt believe that one should solely adhere to the doctrine of religion and ignore the importance of personal integrity standing on its own merit.
In Chapter Ⅲ，Mills argument strikes a balance between his utilitarian and liberal philosophies. And in Chapter Ⅳ， Mill anticipates and addresses some arguments against his theories. After his initial hardline stance， Mill softens a bit as he attempts to clear up inconsistencies regarding his ideal of liberty and individuality. He finally makes a dependent connection between society and man， after denouncing the relationship in the early parts of the book. He makes people partially beholden to society and society responsible for the early development of their citizensa strange thing for a man who sings the praises of autonomy.
Chapter Ⅴ offers an overview of Mills strategy， and through the application of his ideas to everyday events， a clearer view is obtained of what Mills thoughts are about the direction society should go in. Mill suggests several protective measures that are used in modernday society， and the foreshadowing of presentday America and the world is definitely notable in the last chapter.
Due to the length limit of this chapter， only parts of Chapters Ⅰ and Ⅴ are excerpted.
Now lets read the text and reflect on the questions that follow.
Text
Chapter Ⅰ
Introductory
The subject of this Essay is not the socalled Liberty of the Will， so unfortunately opposed to the misnamed doctrine of Philosophical Necessity； but Civil， or Social Liberty: the nature and limits of the power which can be legitimately exercised by society over the individual. A question seldom stated， and hardly ever discussed， in general terms， but which profoundly influences the practical controversies of the age by its latent presence， and is likely soon to make itself recognized as the vital question of the future. It is so far from being new， that， in a certain sense， it has divided mankind， almost from the remotest ages， but in the stage of progress into which the more civilized portions of the species have now entered， it presents itself under new conditions， and requires a different and more fundamental treatment.
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The object of this Essay is to assert one very simple principle， as entitled to govern absolutely the dealings of society with the individual in the way of compulsion and control， whether the means used be physical force in the form of legal penalties， or the moral coercion of public opinion. That principle is， that the sole end for which mankind are warranted， individually or collectively in interfering with the liberty of action of any of their number， is selfprotection. That the only purpose for which power can be rightfully exercised over any member of a civilized community， against his will， is to prevent harm to others. His own good， either physical or moral， is not a sufficient warrant. He cannot rightfully be compelled to do or forbear because it will be better for him to do so， because it will make him happier， because， in the opinions of others， to do so would be wise， or even right. These are good reasons for remonstrating with him， or reasoning with him， or persuading him， or entreating him， but not for compelling him， or visiting him with any evil， in case he do otherwise. To justify that， the conduct from which it is desired to deter him must be calculated to produce evil to some one else. The only part of the conduct of any one， for which he is amenable to society， is that which concerns others. In the part which merely concerns himself， his independence is， of right， absolute. Over himself， over his own body and mind， the individual is sovereign.
It is， perhaps， hardly necessary to say that this doctrine is meant to apply only to human beings in the maturity of their faculties. We are not speaking of children， or of young persons below the age which the law may fix as that of manhood or womanhood. Those who are still in a state to require being taken care of by others， must be protected against their own actions as well as against external injury. For the same reason， we may leave out of consideration those backward states of society in which the race itself may be considered as in its nonage. The early difficulties in the way of spontaneous progress are so great， that there is seldom any choice of means for overcoming them； and a ruler full of the spirit of improvement is warranted in the use of any expedients that will attain an end， perhaps otherwise unattainable. Despotism is a legitimate mode of government in dealing with barbarians， provided the end be their improvement， and the means justified by actually effecting that end. Liberty， as a principle， has no application to any state of things anterior to the time when mankind have become capable of being improved by free and equal discussion. Until then， there is nothing for them but implicit obedience to an Akbar or a Charlemagne， if they are so fortunate as to find one. But as soon as mankind have attained the capacity of being guided to their own improvement by conviction or persuasion (a period long since reached in all nations with whom we need here concern ourselves)， compulsion， either in the direct form or in that of pains and penalties for noncompliance， is no longer admissible as a means to their own good， and justifiable only for the security of others.
Chapter Ⅴ
Applications
THE principles asserted in these pages must be more generally admitted as the basis for discussion of details， before a consistent application of them to all the various departments of government and morals can be attempted with any prospect of advantage. The few observations I propose to make on questions of detail， are designed to illustrate the principles， rather than to follow them out to their consequences. I offer， not so much applications， as specimens of application； which may serve to bring into greater clearness the meaning and limits of the two maxims which together form the entire doctrine of this Essay and to assist the judgment in holding the balance between them， in the cases where it appears doubtful which of them is applicable to the case.
The maxims are， first， that the individual is not accountable to society for his actions， in so far as these concern the interests of no person but himself. Advice， instruction， persuasion， and avoidance by other people， if thought necessary by them for their own good， are the only measures by which society can justifiably express its dislike or disapprobation of his conduct. Secondly， that for such actions as are prejudicial to the interests of others， the individual is accountable， and may be subjected either to social or to legal punishments， if society is of opinion that the one or the other is requisite for its protection.
In the first place， it must by no means be supposed， because damage， or probability of damage， to the interests of others， can alone justify the interference of society， that therefore it always does justify such interference. In many cases， an individual， in pursuing a legitimate object， necessarily and therefore legitimately causes pain or loss to others， or intercepts a good which they had a reasonable hope of obtaining. Such oppositions of interest between individuals often arise from bad social institutions， but are unavoidable while those institutions last； and some would be unavoidable under any institutions. Whoever succeeds in an overcrowded profession， or in a competitive examination； whoever is preferred to another in any contest for an object which both desire， reaps benefit from the loss of others， from their wasted exertion and their disappointment. But it is， by common admission， better for the general interest of mankind， that persons should pursue their objects undeterred by this sort of consequences. In other words， society admits no right， either legal or moral， in the disappointed competitors， to immunity from this kind of suffering； and feels called on to interfere， only when means of success have been employed which it is contrary to the general interest to permit—namely， fraud or treachery， and force.
Again， trade is a social act. Whoever undertakes to sell any description of goods to the public， does what affects the interest of other persons， and of society in general； and thus his conduct， in principle， comes within the jurisdiction of society: accordingly， it was once held to be the duty of governments， in all cases which were considered of importance， to fix prices， and regulate the processes of manufacture. But it is now recognized， though not till after a long struggle， that both the cheapness and the good quality of commodities are most effectually provided for by leaving the producers and sellers perfectly free， under the sole check of equal freedom to the buyers for supplying themselves elsewhere. This is the socalled doctrine of Free Trade， which rests on grounds different from， though equally solid with， the principle of individual liberty asserted in this Essay. Restrictions on trade， or on production for purposes of trade， are indeed restraints； and all restraint， qua restraint， is an evil: but the restraints in question affect only that part of conduct which society is competent to restrain， and are wrong solely because they do not really produce the results which it is desired to produce by them. As the principle of individual liberty is not involved in the doctrine of Free Trade so neither is it in most of the questions which arise respecting the limits of that doctrine: as for example， what amount of public control is admissible for the prevention of fraud by adulteration； how far sanitary precautions， or arrangements to protect workpeople employed in dangerous occupations， should be enforced on employers. Such questions involve considerations of liberty， only in so far as leaving people to themselves is always better， caeteris paribus， than controlling them: but that they may be legitimately controlled for these ends， is in principle undeniable. On the other hand， there are questions relating to interference with trade which are essentially questions of liberty； such as the Maine Law， already touched upon； the prohibition of the importation of opium into China； the restriction of the sale of poisons； all cases， in short， where the object of the interference is to make it impossible or difficult to obtain a particular commodity. These interferences are objectionable， not as infringements on the liberty of the producer or seller， but on that of the buyer.
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The right inherent in society， to ward off crimes against itself by antecedent precautions， suggests the obvious limitations to the maxim， that purely selfregarding misconduct cannot properly be meddled with in the way of prevention or punishment. Drunkennesses， for example， in ordinary cases， is not a fit subject for legislative interference； but I should deem it perfectly legitimate that a person， who had once been convicted of any act of violence to others under the influence of drink， should be placed under a special legal restriction， personal to himself； that if he were afterwards found drunk， he should be liable to a penalty， and that if when in that state he committed another offence， the punishment to which he would be liable for that other offence should be increased in severity. The making himself drunk， in a person whom drunkenness excites to do harm to others， is a crime against others. So， again， idleness， except in a person receiving support from the public， or except when it constitutes a breach of contract， cannot without tyranny be made a subject of legal punishment； but if either from idleness or from any other avoidable cause， a man fails to perform his legal duties to others， as for instance to support his children， it is no tyranny to force him to fulfil that obligation， by compulsory labor， if no other means are available.
Again， there are many acts which， being directly injurious only to the agents themselves， ought not to be legally interdicted， but which， if done publicly， are a violation of good manners， and coming thus within the category of offences against others， may rightfully be prohibited. Of this kind are offences against decency； on which it is unnecessary to dwell， the rather as they are only connected indirectly with our subject， the objection to publicity being equally strong in the case of many actions not in themselves condemnable， nor supposed to be so.
Questions
1. What is the subject and object of Mills Essay?
2. Does Mills doctrine of liberty apply to children and barbarians?
3. According to Mill， what possible impact will an individual， in pursuing a legitimate object， exert upon others?
4. What is the socalled doctrine of Free Trade? And is the principle of individual liberty involved in the doctrine of Free Trade?
5. Can the purely selfregarding misconduct be properly meddled with in the way of prevention of punishment?
Socialism: Utopian and ScientificFrederick EngelsPrereading
Socialism: Utopian and Scientific is a short book first published in 1880 by German-born socialist Friedrich Engels. Intended as a popularization of Marxist ideas for a working class readership, the book was one of the fundamental publications of the international socialist movement during the late 19th and early 20th centuries, selling tens of thousands of copies.
The book explains the differences between utopian socialism and scientific socialism, which Marxism considers itself to embody. The book explains that whereas utopian socialism is idealist, reflecting the personal opinions of the authors and claims that society can be adapted based on these opinions, scientific socialism derives itself from reality. It focuses on the materialist conception of history, which is based on an analysis over history, and concludes that communism naturally follows capitalism.Engels begins the book by chronicling the thought of utopian socialists, starting with Saint-Simon. He then proceeds to Fourier and Robert Owen.In Chapter Two, he summarizes dialectics, and then chronicles the thought from the ancient Greeks to Hegel.Chapter Three summarizes dialectics in relation to economic and social struggles, essentially echoing the words of Marx, and will help the readers to develop a critical thinking of liberalism. This is why Chapter Three is excerpted. Now lets read the text and reflect on the questions that follow.
Text
Ⅲ
Historical Materialism
The materialist conception of history starts from the proposition that the production of the means to support human life and， next to production， the exchange of things produced， is the basis of all social structure； that in every society that has appeared in history， the manner in which wealth is distributed and society divided into classes or orders is dependent upon what is produced， how it is produced， and how the products are exchanged. From this point of view， the final causes of all social changes and political revolutions are to be sought， not in mens brains， not in mens better insights into eternal truth and justice， but in changes in the modes of production and exchange. They are to be sought， not in the philosophy， but in the economics of each particular epoch. The growing perception that existing social institutions are unreasonable and unjust， that reason has become unreason， and right wrong， is only proof that in the modes of production and exchange changes have silently taken place with which the social order， adapted to earlier economic conditions， is no longer in keeping. From this it also follows that the means of getting rid of the incongruities that have been brought to light must also be present， in a more or less developed condition， within the changed modes of production themselves. These means are not to be invented by deduction from fundamental principles， but are to be discovered in the stubborn facts of the existing system of production.
What is， then， the position of modern Socialism in this connection?
The present situation of society—this is now pretty generally conceded—is the creation of the ruling class of today， of the bourgeoisie. The mode of production peculiar to the bourgeoisie， known， since Marx， as the capitalist mode of production， was incompatible with the feudal system， with the privileges it conferred upon individuals， entire social ranks and local corporations， as well as with the hereditary ties of subordination which constituted the framework of its social organization. The bourgeoisie broke up the feudal system and built upon its ruins the capitalist order of society， the kingdom of free competition， of personal liberty， of the equality， before the law， of all commodity owners， of all the rest of the capitalist blessings. Thenceforward， the capitalist mode of production could develop in freedom. Since steam， machinery， and the making of machines by machinery transformed the older manufacture into modern industry， the productive forces， evolved under the guidance of the bourgeoisie， developed with a rapidity and in a degree unheard of before. But just as the older manufacture， in its time， and handicraft， becoming more developed under its influence， had come into collision with the feudal trammels of the guilds， so now modern industry， in its complete development， comes into collision with the bounds within which the capitalist mode of production holds it confined. The new productive forces have already outgrown the capitalistic mode of using them. And this conflict between productive forces and modes of production is not a conflict engendered in the mind of man， like that between original sin and divine justice. It exists， in fact， objectively， outside us， independently of the will and actions even of the men that have brought it on. Modern Socialism is nothing but the reflex， in thought， of this conflict in fact； its ideal reflection in the minds， first， of the class directly suffering under it， the working class.
Now， in what does this conflict consist?
Before capitalist production—i.e.， in the Middle Ages—the system of petty industry obtained generally， based upon the private property of the laborers in their means of production； in the country， the agriculture of the small peasant， freeman， or serf； in the towns， the handicrafts organized in guilds. The instruments of labor—land， agricultural implements， the workshop， the tool—were the instruments of labor of single individuals， adapted for the use of one worker， and， therefore， of necessity， small， dwarfish， circumscribed. But， for this very reason， they belonged as a rule to the producer himself. To concentrate these scattered， limited means of production， to enlarge them， to turn them into the powerful levers of production of the present day—this was precisely the historic role of capitalist production and of its upholder， the bourgeoisie. In the fourth section of Capital， Marx has explained in detail how since the 15th century this has been historically worked out through the three phases of simple cooperation， manufacture， and modern industry. But the bourgeoisie， as is shown there， could not transform these puny means of production into mighty productive forces without transforming them， at the same time， from means of production of the individual into social means of production only workable by a collectivity of men. The spinning wheel， the handloom， the blacksmiths hammer， were replaced by the spinningmachine， the powerloom， the steamhammer； the individual workshop， by the factory implying the cooperation of hundreds and thousands of workmen. In like manner， production itself changed from a series of individual into a series of social acts， and the production from individual to social products. The yarn， the cloth， the metal articles that now come out of the factory were the joint product of many workers， through whose hands they had successively to pass before they were ready. No one person could say of them: “I made that； this is my product.”
But where， in a given society， the fundamental form of production is that spontaneous division of labor which creeps in gradually and not upon any preconceived plan， there the products take on the form of commodities， whose mutual exchange， buying and selling， enable the individual producers to satisfy their manifold wants. And this was the case in the Middle Ages. The peasant， e.g.， sold to the artisan agricultural products and bought from him the products of handicraft. Into this society of individual producers， of commodity producers， the new mode of production thrust itself. In the midst of the old division of labor， grown up spontaneously and upon no definite plan， which had governed the whole of society， now arose division of labor upon a definite plan， as organized in the factory； side by side with individual production appeared social production. The products of both were sold in the same market， and， therefore， at prices at least approximately equal. But organization upon a definite plan was stronger than spontaneous division of labor. The factories working with the combined social forces of a collectivity of individuals produced their commodities far more cheaply than the individual small producers. Individual producers succumbed in one department after another. Socialized production revolutionized all the old methods of production. But its revolutionary character was， at the same time， so little recognized that it was， on the contrary， introduced as a means of increasing and developing the production of commodities. When it arose， it found readymade， and made liberal use of， certain machinery for the production and exchange of commodities: merchants capital， handicraft， wagelabor. Socialized production thus introducing itself as a new form of the production of commodities， it was a matter of course that under it the old forms of appropriation remained in full swing， and were applied to its products as well.
In the medieval stage of evolution of the production of commodities， the question as to the owner of the product of labor could not arise. The individual producer， as a rule， had， from raw material belonging to himself， and generally his own handiwork， produced it with his own tools， by the labor of his own hands or of his family. There was no need for him to appropriate the new product. It belonged wholly to him， as a matter of course. His property in the product was， therefore， based upon his own labor. Even where external help was used， this was， as a rule， of little importance， and very generally was compensated by something other than wages. The apprentices and journeymen of the guilds worked less for board and wages than for education， in order that they might become master craftsmen themselves.
Then came the concentration of the means of production and of the producers in large workshops and manufactories， their transformation into actual socialized means of production and socialized producers. But the socialized producers and means of production and their products were still treated， after this change， just as they had been before—i.e.， as the means of production and the products of individuals. Hitherto， the owner of the instruments of labor had himself appropriated the product， because， as a rule， it was his own product and the assistance of others was the exception. Now， the owner of the instruments of labor always appropriated to himself the product， although it was no longer his product but exclusively the product of the labor of others. Thus， the products now produced socially were not appropriated by those who had actually set in motion the means of production and actually produced the commodities， but by the capitalists. The means of production， and production itself， had become in essence socialized. But they were subjected to a form of appropriation which presupposes the private production of individuals， under which， therefore， every one owns his own product and brings it to market. The mode of production is subjected to this form of appropriation， although it abolishes the conditions upon which the latter rests.
This contradiction， which gives to the new mode of production its capitalistic character， contains the germ of the whole of the social antagonisms of today. The greater the mastery obtained by the new mode of production over all important fields of production and in all manufacturing countries， the more it reduced individual production to an insignificant residuum， the more clearly was brought out the incompatibility of socialized production with capitalistic appropriation.
The first capitalists found， as we have said， alongside of other forms of labor， wagelabor readymade for them on the market. But it was exceptional， complementary， accessory， transitory wagelabor. The agricultural laborer， though， upon occasion， he hired himself out by the day， had a few acres of his own land on which he could at all events live at a pinch. The guilds were so organized that the journeyman of today became the master of tomorrow. But all this changed， as soon as the means of production became socialized and concentrated in the hands of capitalists. The means of production， as well as the product， of the individual producer became more and more worthless； there was nothing left for him but to turn wageworker under the capitalist. Wagelabor， aforetime the exception and accessory， now became the rule and basis of all production； aforetime complementary， it now became the sole remaining function of the worker. The wageworker for a time became a wageworker for life. The number of these permanent was further enormously increased by the breakingup of the feudal system that occurred at the same time， by the disbanding of the retainers of the feudal lords， the eviction of the peasants from their homesteads， etc. The separation was made complete between the means of production concentrated in the hands of the capitalists， on the one side， and the producers， possessing nothing but their laborpower， on the other. The contradiction between socialized production and capitalistic appropriation manifested itself as the antagonism of proletariat and bourgeoisie.
We have seen that the capitalistic mode of production thrust its way into a society of commodityproducers， of individual producers， whose social bond was the exchange of their products. But every society based upon the production of commodities has this peculiarity: that the producers have lost control over their own social interrelations. Each man produces for himself with such means of production as he may happen to have， and for such exchange as he may require to satisfy his remaining wants. No one knows how much of his particular article is coming on the market， nor how much of it will be wanted. No one knows whether his individual product will meet an actual demand， whether he will be able to make good his costs of production or even to sell his commodity at all. Anarchy reigns in socialized production.
But the production of commodities， like every other form of production， has it peculiar， inherent laws inseparable from it； and these laws work， despite anarchy， in and through anarchy. They reveal themselves in the only persistent form of social interrelations—i.e.， in exchange—and here they affect the individual producers as compulsory laws of competition. They are， at first， unknown to these producers themselves， and have to be discovered by them gradually and as the result of experience. They work themselves out， therefore， independently of the producers， and in antagonism to them， as inexorable natural laws of their particular form of production. The product governs the producers.
In mediaeval society， especially in the earlier centuries， production was essentially directed toward satisfying the wants of the individual. It satisfied， in the main， only the wants of the producer and his family. Where relations of personal dependence existed， as in the country， it also helped to satisfy the wants of the feudal lord. In all this there was， therefore， no exchange； the products， consequently， did not assume the character of commodities. The family of the peasant produced almost everything they wanted: clothes and furniture， as well as the means of subsistence. Only when it began to produce more than was sufficient to supply its own wants and the payments in kind to the feudal lords， only then did it also produce commodities. This surplus， thrown into socialized exchange and offered for sale， became commodities.
The artisan in the towns， it is true， had from the first to produce for exchange. But they， also， themselves supplied the greatest part of their individual wants. They had gardens and plots of land. They turned their cattle out into the communal forest， which， also， yielded them timber and firing. The women spun flax， wool， and so forth. Production for the purpose of exchange， production of commodities， was only in its infancy. Hence， exchange was restricted， the market narrow， the methods of production stable； there was local exclusiveness without， local unity within； the mark in the country； in the town， the guild.
But with the extension of the production of commodities， and especially with the introduction of the capitalist mode of production， the laws of commodityproduction， hitherto latent， came into action more openly and with greater force. The old bonds were loosened， the old exclusive limits broken through， the producers were more and more turned into independent， isolated producers of commodities. It became apparent that the production of society at large was ruled by absence of plan， by accident， by anarchy； and this anarchy grew to greater and greater height. But the chief means by aid of which the capitalist mode of production intensified this anarchy of socialized production was the exact opposite of anarchy. It was the increasing organization of production， upon a social basis， in every individual productive establishment. By this， the old， peaceful， stable condition of things was ended. Wherever this organization of production was introduced into a branch of industry， it brooked no other method of production by its side. The field of labor became a battleground. The great geographical discoveries， and the colonization following them， multiplied markets and quickened the transformation of handicraft into manufacture. The war did not simply break out between the individual producers of particular localities. The local struggles begat， in their turn， national conflicts， the commercial wars of the 17th and 18th centuries.
Finally， modern industry and the opening of the worldmarket made the struggle universal， and at the same time gave it an unheardof virulence. Advantages in natural or artificial conditions of production now decide the existence or nonexistence of individual capitalists， as well as of whole industries and countries. He that falls is remorselessly cast aside. It is the Darwinian struggle of the individual for existence transferred from Nature to society with intensified violence. The conditions of existence natural to the animal appear as the final term of human development. The contradiction between socialized production and capitalistic appropriation now presents itself as an antagonism between the organization of production in the individual workshop and the anarchy of production in society generally.
The capitalistic mode of production moves in these two forms of the antagonism immanent to it from its very origin. It is never able to get out of that “vicious circle” which Fourier had already discovered. What Fourier could not， indeed， see in his time is that this circle is gradually narrowing； that the movement becomes more and more a spiral， and must come to an end， like the movement of planets， by collision with the centre. It is the compelling force of anarchy in the production of society at large that more and more completely turns the great majority of men into proletarians； and it is the masses of the proletariat again who will finally put an end to anarchy in production. It is the compelling force of anarchy in social production that turns the limitless perfectibility of machinery under modern industry into a compulsory law by which every individual industrial capitalist must perfect his machinery more and more， under penalty of ruin.
But the perfecting of machinery is making human labor superfluous. If the introduction and increase of machinery means the displacement of millions of manual by a few machineworkers， improvement in machinery means the displacement of more and more of the machineworkers themselves. It means， in the last instance， the production of a number of available wage workers in excess of the average needs of capital， the formation of a complete industrial reserve army， as I called it in 1845， available at the times when industry is working at high pressure， to be cast out upon the street when the inevitable crash comes， a constant dead weight upon the limbs of the workingclass in its struggle for existence with capital， a regulator for keeping of wages down to the low level that suits the interests of capital.
Thus it comes about， to quote Marx， that machinery becomes the most powerful weapon in the war of capital against the workingclass； that the instruments of labor constantly tear the means of subsistence out of the hands of the laborer； that they very product of the worker is turned into an instrument for his subjugation.
Thus it comes about that the economizing of the instruments of labor becomes at the same time， from the outset， the most reckless waste of laborpower， and robbery based upon the normal conditions under which labor functions； that machinery，
“the most powerful instrument for shortening labor time， becomes the most unfailing means for placing every moment of the laborers time and that of his family at the disposal of the capitalist for the purpose of expanding the value of his capital.”
Thus it comes about that the overwork of some becomes the preliminary condition for the idleness of others， and that modern industry， which hunts after new consumers over the whole world， forces the consumption of the masses at home down to a starvation minimum， and in doing thus destroys its own home market.
“The law that always equilibrates the relative surpluspopulation， or industrial reserve army， to the extent and energy of accumulation， this law rivets the laborer to capital more firmly than the wedges of Vulcan did Prometheus to the rock. It establishes an accumulation of misery， corresponding with the accumulation of capital. Accumulation of wealth at one pole is， therefore， at the same time accumulation of misery， agony of toil， slavery， ignorance， brutality， mental degradation， at the opposite pole， i.e.， on the side of the class that produces its own product in the form of capital.
And to expect any other division of the products from the capitalist mode of production is the same as expecting the electrodes of a battery not to decompose acidulated water， not to liberate oxygen at the positive， hydrogen at the negative pole， so long as they are connected with the battery.
We have seen that the everincreasing perfectibility of modern machinery is， by the anarchy of social production， turned into a compulsory law that forces the individual industrial capitalist always to improve his machinery， always to increase its productive force. The bare possibility of extending the field of production is transformed for him into a similarly compulsory law. The enormous expansive force of modern industry， compared with which that of gases is mere childs play， appears to us now as a necessity for expansion， both qualitative and quantative， that laughs at all resistance. Such resistance is offered by consumption， by sales， by the markets for the products of modern industry. But the capacity for extension， extensive and intensive， of the markets is primarily governed by quite different laws that work much less energetically. The extension of the markets cannot keep pace with the extension of production. The collision becomes inevitable， and as this cannot produce any real solution so long as it does not break in pieces the capitalist mode of production， the collisions become periodic. Capitalist production has begotten another “vicious circle”.