On PRODUCTION and CONSUMPTION. 33. The words Production and Consumption are two of the leading fundamental conceptions of Economics, and are always used as correlatives. It is said that Consumption is the end of all Production. But unfortunately the meaning of neither word is settled, so that it is impossible to affix any meaning to the proposition, and both words are often used in senses which are manifestly inadmissible We have already seen that by Production, the Physiocrates meant the obtaining all sorts of produce from the earth, and bringing it into commerce. After passing through various stages which they called Distribution, it passed into the hands. of the final purchaser, who bought it for use and enjoyment. This final purchase the Physiocrates called the Acheteur-Con sommateur. But as the Physiocrates maintained that all products are ultimately exchanged against products, the Acheteur-Consommateur of one product must have some product of his own to offer in exchange for it. The complete exchange of one product against another product they called Commerce, or Exchange. They held' that money is of no use but to facilitate the exchange of products: being itself only an intermediate pledge between buying and selling. That commerce by the intervention of money is incomplete: in an exchange, things are consumed (consommés) on each side; they are what people wish to enjoy. In a sale it is only the purchaser who fulfils his object, but all is not finished for the seller: the money he receives is not a bien capable of being enjoyed: he must in his turn become a buyer. An Exchange arrives directly at its object which is consumption (consommation); but a contract in which money intervenes is not consummated, or completed, or perfected (consommé), because the seller must become a buyer. To arrive at the consummation, or completion (consommation) there are required four terms and three contractors. Consumption is the measure of reproduction, because products which remain without consumption degenerate into superfluities without value. 1 Quesnay; Dialogue sur les travaux des artisans. We therefore see clearly what the Physiocrates meant by Production and Consumption, and an Exchange or Commerce: Commerce being the complete passage of a product from the place of production to the place of consumption; from the first seller to the last buyer-consumer (acheteur-consommateur.)' The Physiocrates held all labour, except only agricultural, to be sterile and unproductive, because it did not increase the quantity of material products: and that neither labour nor commerce enrich a state. But Beccaria (1769) and Verri (1772) in Italy; Smith (1776) in England; and Condillac (1776) in France rose up against the doctrine that manufactures and commerce are not productive of wealth. Now it is clear that the words Production and Consumption, as hitherto used, are complex terms, involving several ideas; and we must now, in accordance with the canons we laid down concerning the formation of General Conceptions, ascertain the single general idea which each of them represents. On PRODUCTION. 2 Smith says that Capital may be employed productively in four different ways, and that all persons who are engaged in these operations are productive labourers. But, unfortunately, though he enumerates several methods of employing capital productively, and several classes of persons whom he denominates productive labourers, he gives no definition of what Production is, and we shall have to shew hereafter that he is very inconsistent with himself on the subject of Productive Labour. J. B. Say rightly adopted the extended meaning of productive labour given by Smith and Condillac, and felt it necessary to enlarge the original definition of the word. He says:"We cannot create objects: the mass of matter of which the world is composed can neither be increased nor diminished. All that we can do is to reproduce these matters under another form, which makes them fit for some purpose which they had not before. Hence there is creation, not of matter, but of utility, and as this utility gives them value, there is Production of Wealth. "This is the meaning of Production in Political Economy, 1 Mercier de la Rivière; L'ordre naturel des sociétés politiques, ch. xii. 2 Book II., ch. 5. 3 Traité, Book I., ch. 1. R and in this work. Production is not the creation of matter, but the creation of utility. It is not measured by the length, the volume, or the weight of the product, but by the utility which has been conferred. There is then truly Production of Wealth, where there is creation or increase of utility." Say also adopts Smith's enumeration of Productive labourers, agricultural, manufacturing, and commercial: and he says that commercial industry contributes to production by raising the value of a product by its transport from one place to another. So again he says' that Production is to give a recognized value to anything which makes it capable of procuring something else in exchange of equal value; and that commercial production is the creation of a value obtained by the transport or the distribution to consumers of products already existing. So again he says"-"We cannot bring out of nothing a single particle of matter; we cannot even send back a single particle into nothing; but we can call out of nothing the qualities which make matter, which had no value previously, acquire a value, and become wealth. It is in this that Production consists in Political Economy. There is the miracle of human industry: and the things to which value is thus given are termed PRODUCTS. "To create products, not being able to create matter, the action of industry is necessarily confined to separating, combining, and transporting the molecules of which it is composed. It changes the state of matter, and that is all: and by this change of state it makes it fit to serve us." Now so far as regards matter and material products, this is undoubtedly true: but J. B. Say himself makes immaterial products an integral part of Economics, and treats them as Wealth and Capital, just in the same manner as material products. He says that the sciences, and talents of professional men, are capital which give a revenue, and how are these sciences and talents formed out of the particles of matter? They are the pure products of thought. But those who provide them when they are wanted, are evidently as much producers as the producers of material products. Say also admits Rights, such as Commercial Obligations of all sorts, Copyrights, &c., to be Wealth: but how are these Rights formed out of particles of matter? 1 Epitome at the end of the Traité. 2 Cours, Part I.; Div. I., ch. IV. Mr. Mill says "The production of wealth: the extraction of the instruments of human subsistence and enjoyment from the materials of the globe." And though the first book of his work is devoted to Production, he gives no further definition of it. In it he enumerates the different kind of labourers whom he considers to be productive. However, in a subsequent part of his work he admits that transport in commerce is one species of production-He says "Improvements in production; understanding the last expression in its widest sense to include the process of procuring commodities from a distance, as well as that of producing them." 2 3 So Malthus defines Production to be "The creation of objects which constitute wealth." So Destutt de Tracy says "Not only can we never create anything, but it is impossible for us to conceive what it is to create or to annihilate, if we rigorously understand by the words to make something out of nothing, or to reduce something to nothing; for we have never seen anything come out of nothing, or return to it. Thence the axiom admitted by all antiquity-Nothing can come from nothing, and Nothing can go back into nothing. What, then, do we do by our labour, by our action on all the things which surround us? Never anything but effecting on these things changes of form, or place, which apply them to our use, and which make them useful to the satisfaction of our wants. That is what we must understand by Producing; it is to give things a utility they had not before. Whatever our labour may be if it does not result in a utility it is unfruitful; if it results in one it is productive." We need not give any more extracts, because it is certain that these sufficiently represent the general use of the word Production by Economical writers. Now we observe that the general drift of all these discussions on production is to consider the process by which the product is obtained. Now if this were a true view of the Economic meaning of Production, it would follow that when we treated of the "Production of Wealth" in Economics, we should have to investigate the whole science and art of agriculture, of mining, and all the processes 2 Book IV., c. 3, § 1. 1 Preliminary Remarks. 3 Definitions in Political Economy, p. 235. + Traité d'économie politique, p. 82. in manufactures of every description, and all trades, because all these things are the production of wealth according to the definition given above. But this is a complete error. Every Economist would at once say that this is a complete misconception of the subject. Economics has nothing to do with any of the processes of agriculture, mining, manufacturing or the handicraft of any workman, but only with the value of the product when obtained. A product does not enter into the science of Economics until it enters into commerce, and seeks to be exchanged, and the sole purport and aim of Economics is to determine the relative quantities of other products it can be exchanged for. The earliest Economists over and over again said that the science has nothing to do with products which are obtained and enjoyed by their producers without being exchanged. And Whately', Bastiat, and Perry 3, already quoted, clearly enforce the same doctrine. By dwelling so much, therefore, on the process of obtaining products, these Economists have given a wrong direction to the ideas of their readers, so far as regards Economics, and we must now ascertain what is the true Economic meaning of Production. To ascertain this, we have only to look at the primary and original meaning of Producere in Latin: it is to lead or bring forth; and it is the technical word used for exposing to sale. Thus Terence, Eunuchus, Act I., sc. 2, l. 55, says:— "Pretium sperans illico PRODUCIT: vendit." Hoping for a good price, offers her there for sale; sells her. Again in the Heauton Timorumenos, Act I., sc. 1, l. 90: "Ancillas, servos * Omnes PRODUXI, ac vendidi." All the slaves, male and female, I offered for sale, and sold. So also Suetonius, De illus. gram. c 4, says:-" Quum familia alicujus venalis produceretur"-When any one's household slaves were offered for sale. And the original sense of Produce in English is exactly the same as in Latin. It is to draw forth, to cause to come near. Thus in Isaiah xli., 21, it is said: "Produce your cause, saith 2 1p. 100. p. 101. p. 122. |