Part 3
* Supposing that 48,000 or 50,000 hectares were sufficient to supply the present consumption, it would require 150,000 for triple that consumption, which M. d'Argout admits as possible. Moreover, if beet-root entered into a six years' rotation of crops, it would occupy successively 900,000 hectares, or 1-38th of the arable land.
But what is true with regard to sugar, cannot be otherwise with regard to bread. If, then, the _utility_ of any branch of industry is to be estimated not by the amount of satisfactions it is fitted to procure us with a determinate amount of labour, but, on the contrary, by the amount of labour which it exacts in order to yield us a determinate amount of satisfactions, what we ought evidently to desire is, that each acre of land should yield less corn, and each grain of com less nourishment; in other words, that our land should be comparatively barren; for then the quantity of land, capital, and manual labour that would be required for the maintenance of our population would be much more considerable; we could then say that the demand for human labour would be in direct proportion to this barrenness. The aspirations of MM. Bugeaud, Saint-Cricq, Dupin, and d'Argout, would then be satisfied; bread would be dear, labour abundant, and France rich--rich at least in the sense in which these gentlemen understand the word.
What we should desire also is, that human intelligence should be enfeebled or extinguished; for, as long as it survives, it will be continually endeavouring to augment _the proportion which the end bears to the means, and which the product bears to the labour_. It is in that precisely that intelligence consists.
Thus, it appears that _sisyphism_ has been the doctrine of all the men who have been intrusted with our industrial destinies. It would be unfair to reproach them with it. This principle guides Ministers only because it is predominant in the Chambers; and it predominates in the Chambers only because it is sent there by the electoral body, and the electoral body is imbued with it only because public opinion is saturated with it.
I think it right to repeat here that I do not accuse men such as MM. Bugeaud, Dupin, Saint-Cricq, and d'Argout of being absolutely and under all circumstances _sisyphists_. They are certainly not so in their private transactions; for in these they always desire to obtain _by way of exchange_ what would cost them dearer to procure _by direct production_; but I affirm they are _sisyphists_ when they hinder the country from doing the same thing.*
* See on the same subject, _Sophismes Économiques_, second series, ch. xvi., post, and _Harmonies Économiques_, ch. vi.
IV. TO EQUALIZE THE CONDITIONS OF PRODUCTION.
It has been said.....but in case I should be accused of putting sophisms into the mouths of the protectionists, I shall allow one of their most vigorous athletes to speak for them.
"It has been thought that protection in our case should simply represent the difference which exists between the cost price of a commodity which we produce and the cost price of the same commodity produced by our neighbours.... A protective duty calculated on this basis would only ensure free competition....; free competition exists only when there is equality in the conditions and in the charges. In the case of a horse race, we ascertain the weight which each horse has to carry, and so equalize the conditions; without that there could be no fair competition. In the case of trade, if one of the sellers can bring his commodity to market at less cost, he ceases to be a competitor, and becomes a monopolist.... Do away with this protection which represents the difference of cost price, and the foreigner invades our markets and acquires a monopoly."*
"Every one must wish, for his own sake, as well as for the sake of others, that the production of the country should be protected against foreign competition, _whenever the latter can furnish products at a lower price._"**
* M. le Vicomte de Romanet.
** Matthieu le Dombasle.
This argument recurs continually in works of the protectionist school. I propose to examine it carefully, and I solicit earnestly the reader's patience and attention. I shall consider, first of all, the inequalities which are attributable to nature, and afterwards those which are attributable to diversity of taxation.
In this, as in other cases, we shall find protectionist theorists viewing their subject from the producer's stand-point, whilst we advocate the cause of the unfortunate consumers, whose interests they studiously keep out of sight. They institute a comparison between the field of industry and the _turf_. But as regards the latter, the race is at once the _means_ and the _end_. The public feels no interest in the competition beyond the competition itself. When you start your horses, your _end_, your object, is to find out which is the swiftest runner, and I see your reason for equalizing the weights. But if your _end_, your object, were to secure the arrival of some important and urgent news at the winning-post, could you, without inconsistency, throw obstacles in the way of any one who should offer you the best means of expediting your message? This is what you do in commercial affairs. You forget the end, the object sought to be attained, which is material prosperity; you disregard it, you sacrifice it to a veritable _petitio principii_; in plain language, you are begging the question.
But since we cannot bring our opponents to our point of view, let us place ourselves in theirs, and examine the question in its relations with production.
I shall endeavour to prove,
1st, That to level and equalize the conditions of labour, is to attack exchange in its essence and principle.
2d, That it is not true that the labour of a country is neutralized by the competition of more favoured countries.
3d, That if that were true, protective duties would not equalize the conditions of production.
4th, That liberty, freedom of trade, levels these conditions as much as they can be levelled.
5th, That the least favoured countries gain most by exchange.
I. To level and equalize the conditions of labour is not simply to cramp exchanges in certain branches of trade, it is to attack exchange in its principle, for its principle rests upon that very diversity, upon those very inequalities of fertility, aptitude, climate, and temperature, which you desire to efface. If Guienne sends wine to Brittany, and if Brittany sends corn to Guienne, it arises from their being placed under different conditions of production. Is there a different law for international exchanges? To urge against international exchanges that inequality of conditions which gives rise to them, and explains them, is to argue against their very existence. If protectionists had on their side sufficient logic and power, they would reduce men, like snails, to a state of absolute isolation. Moreover, there is not one of their sophisms which, when submitted to the test of rigorous deductions, does not obviously tend to destruction and annihilation.
II. It is not true, in point of _fact_, that inequality of conditions existing between two similar branches of industry entails necessarily the ruin of that which is least favourably situated. On the turf, if one horse gains the prize, the other loses it; but when two horses are employed in useful labour, each produces a beneficial result in proportion to its powers; and if the more vigorous renders the greater service, it does not follow that the other renders no service at all. We cultivate wheat in all the departments of France, although there are between them enormous differences of fertility; and if there be any one department which does not cultivate wheat, it is because it is not profitable to engage in that species of culture in that locality. In the same way, analogy shows us that under the _régime_ of liberty, in spite of similar differences, they produce wheat in all the countries of Europe; and if there be one which abandons the cultivation of that grain, it is because it is found _more for its interest_ to give another direction to the employment of its land, labour, and capital And why should the fertility of one department not paralyze the agriculturist of a neighbouring department which is less favourably situated? Because the economic phenomena have a flexibility, an elasticity, _levelling powers_, so to speak, which appear to have altogether escaped the notice of the protectionist school. That school accuses us of being given up to system; but it is the protectionists who are systematic in the last degree, if the spirit of system consists in bolstering up arguments which rest upon one fact instead of upon an aggregation of facts. In the example which we have given, it is the difference in the value of lands which compensates the difference in their fertility. Your field produces three times more than mine. Yes, but it has cost you ten times more, and I can still compete with you. This is the whole mystery. And observe, that superiority in some respects leads to inferiority in others. It is just because your land is more fertile that it is dearer; so that it is not _accidentally_, but _necessarily_, that the equilibrium is established, or tends to be established; and it cannot be denied that liberty is the _régime_ which is most favourable to this tendency.
I have referred to a branch of agricultural industry; I might as well have referred to industry in a different department. There are tailors at Quimper, and that does not hinder there being tailors also in Paris, though the latter pay a higher rent, and live at much greater expense. But then they have a different set of customers, and that serves not only to redress the balance, but to make it incline to their side.
When we speak, then, of equalizing the conditions of labour, we must not omit to examine whether liberty does not give us what we seek from an arbitrary system.
This natural levelling power of the economic phenomena is so important to the question we are considering, and at the same time so fitted to inspire us with admiration of the providential wisdom which presides over the equitable government of society, that I must ask permission to dwell upon it for a little.
The protectionist gentlemen tell us: Such or such a people have over us an advantage in the cheapness of coal, of iron, of machinery, of capital--we cannot compete with them.
We shall examine the proposition afterwards under all its aspects. At present, I confine myself to the inquiry whether, when a superiority and an inferiority are both present, they do not possess in themselves, the one an ascending, the other a descending force, which must ultimately bring them back to a just equilibrium.
Suppose two countries, A and B. A possesses over B all kinds of advantages. You infer from this, that every sort of industry will concentrate itself in A, and that B is powerless. A, you say, sells much more than it buys; B buys much more than it sells. I might dispute this, but I respect your hypothesis.
On this hypothesis, labour is much in demand in A, and will soon rise in price there.
Iron, coal, land, food, capital, are much in demand in A, and they will soon rise in price there.
Contemporaneously with this, labour, iron, coal, land, food, capital, are in little request in B, and will soon fall in price there.
Nor is this all. While A is always selling, and B is always buying, money passes from B to A. It becomes abundant in A, and scarce in B.
But abundance of money means that we must have plenty of it to buy everything else. Then in A, to the _real dearness_ which arises from a very active demand, there is added a _nominal dearness_, which is due to a redundancy of the precious metals.
Scarcity of money means that little is required for each purchase. Then in B a _nominal cheapness_ comes to be combined with _real cheapness_.
In these circumstances, industry will have all sorts of motives--motives, if I may say so, carried to the highest degree of intensity--to desert A and establish itself in B.
Or, to come nearer what would actually take place under such circumstances, we may affirm that sudden displacements being so repugnant to the nature of industry, such a transfer would not have been so long delayed, but that from the beginning, under the free _régime_, it would have gradually and progressively shared and distributed itself between A and B, according to the laws of supply and demand--that is to say, according to the laws of justice and utility.
And when I assert that if it were possible for industry to concentrate itself upon one point, that very circumstance would set in motion an irresistible decentralizing force, I indulge in no idle hypothesis.
Let us listen to what was said by a manufacturer in addressing the Manchester Chamber of Commerce (I omit the figures by which he supported his demonstration):--
"Formerly we exported stuffs; then that exportation gave place to that of yams, which are the raw material of stuffs; then to that of machines, which are the instruments for producing yarn; afterwards to the exportation of the capital with which we construct our machines; finally, to that of our workmen and our industrial skill, which are the source of our capital. All these elements of labour, one after the other, are set to work wherever they find the most advantageous opening, wherever the expense of living is cheaper and the necessaries of life are moat easily procured; and at the present day, in Prussia, in Austria, in Saxony, in Switzerland, in Italy, we see manufactures on an immense scale founded and supported by English capital, worked by English operatives, and directed by English engineers."
You see very clearly, then, that nature, or rather that Providence, more wise, more far-seeing than your narrow and rigid theory supposes, has not ordered this concentration of industry, this monopoly of all advantages upon which you found your reasoning as upon a fact which is unalterable and without remedy. Nature has provided, by means as simple as they are infallible, that there should be dispersion, diffusion, solidarity, simultaneous progress; all constituting a state of things which your restrictive laws paralyze as much as they can; for the tendency of such laws is, by isolating communities, to render the diversity of condition much more marked, to prevent equalization, hinder fusion, neutralize countervailing circumstances, and segregate nations, whether in their superiority or in their inferiority of condition.
III. In the third place, to contend that by a protective duty you equalize the conditions of production, is to give currency to an error by a deceptive form of speech. It is not true that an import duty equalizes the conditions of production. These remain, after the imposition of the duty, the same as they were before. At most, all that such a duty equalizes are _the conditions of sale_. It may be said, perhaps, that I am playing upon words, but I throw back the accusation. It is for my opponents to show that _production and sale_ are synonymous terms; and if they cannot do this, I am warranted in fastening upon them the reproach, if not of playing on words, at least of mixing them up and confusing them.
To illustrate what I mean by an example: I suppose some Parisian speculators to devote themselves to the production of oranges. They know that the oranges of Portugal can be sold in Paris for a penny apiece, whilst they, on account of the frames and hot-houses which the colder climate would render necessary, could not sell them for less than a shilling as a remunerative price. They demand that Portuguese oranges should have a duty of elevenpence imposed upon them. By means of this duty, they say, the _conditions af production_ will be equalized; and the Chamber, giving effect, as it always does, to such reasoning, inserts in the tariff a duty of elevenpence upon every foreign orange.
Now, I maintain that the _conditions of production_ are in nowise changed. The law has made no change on the heat of the sun of Lisbon, or on the frequency and intensity of the frosts of Paris. The ripening of oranges will continue to go on naturally on the banks of the Tagus, and artificially on the banks of the Seine--that is to say, much more human labour will be required in the one country than in the other. The conditions of sale are what have been equalized. The Portuguese must now sell us their oranges at a shilling, elevenpence of which goes to pay the tax. That tax will be paid, it is evident, by the French consumer. And look at the whimsical result. Upon each Portuguese orange consumed, the country will lose nothing, for the extra elevenpence charged to the consumer will be paid into the treasury. This will cause displacement, but not loss. But upon each French orange consumed there will be a loss of elevenpence, or nearly so, for the purchaser will certainly lose that sum, and the seller as certainly will not gain it, seeing that by the hypothesis he will only have received the cost price. I leave it to the protectionists to draw the inference.
IV. If I have dwelt upon this distinction between the conditions of production and the conditions of sale, a distinction which the protectionists will no doubt pronounce paradoxical, it is because it leads me to inflict on them another, and a much stranger, paradox, which is this: Would you equalize effectually the conditions of production, leave exchange free.
Now, really, it will be said, this is too much; you must be making game of us. Well, then, were it only for curiosity, I entreat the gentlemen protectionists to follow me on to the conclusion of my argument. It will not be long. I revert to my former illustration.
Let us suppose for a moment that the average daily wage which a Frenchman earns is equal to a shilling, and it follows incontestably that to produce directly an orange in France, a day's work, or its equivalent, is required; while to produce the value of a Portuguese orange, only a twelfth part of that day's labour would be necessary; which means exactly this, that the sun does at Lisbon what human labour does at Paris. Now, is it not very evident that if I can produce an orange, or, what comes to the same thing, the means of purchasing one, with a twelfth part of a day's labour, I am placed, with respect to this production, under exactly the same conditions as the Portuguese producer himself, excepting the carriage, which must be at my expense. It is certain, then, that liberty equalizes the conditions of production direct or indirect, as far as they can be equalized, since it leaves no other difference, but the inevitable one arising from the expense of transport.
I add, that liberty equalizes also the conditions of enjoyment, of satisfaction, of consumption, with which the protectionists never concern themselves, and which are yet the essential consideration, consumption being the end and object of all our industrial efforts. In virtue of free trade, we enjoy the sun of Portugal like the Portuguese themselves. The inhabitants of Havre and the citizens of London are put in possession, and on the same conditions, of all the mineral resources which nature has bestowed on Newcastle.
V. Gentlemen protectionists, you find me in a paradoxical humour; and I am disposed to go further still. I say, and I sincerely think, that if two countries are placed under unequal conditions of production, _it is that one of the two which is least favoured by nature which has most to gain by free trade_. To prove this, I must depart a little from the usual form of such a work as this. I shall do so nevertheless, first of all, because the entire question lies there, and also because it will afford me an opportunity of explaining an economic law of the highest importance, and which, if rightly understood, appears to me to be fitted to bring back to the science all those sects who, in our day, seek in the land of chimeras that social harmony which they fail to discover in nature. I refer to the law of consumption, which it is perhaps to be regretted that the majority of economists have neglected.
Consumption is the _end_ and final cause of all the economic phenomena, and it is in consumption consequently that we must expect to find their ultimate and definitive solution.
Nothing, whether favourable or unfavourable, can abide permanently with the producer. The advantages which nature and society bestow upon him, the inconveniences he may experience, glide past him, so to speak, and are absorbed and mixed up with the community in as far as the community represents consumers. This is an admirable law both in its cause and in its effects, and he who shall succeed in clearly describing it is entitled, in my opinion, to say, "I have not passed through life without paying my tribute to society." Everything which favours the work of production is welcomed with joy by the producer, for the _immediate effect_ of it is to put him in a situation to render greater service to the community, and to exact from it a greater remuneration. Every circumstance which retards or interrupts production gives pain to the producer, for the _immediate effect_ of it is to circumscribe his services, and consequently his remuneration. _Immediate_ good or ill circumstances--fortunate or unfortunate--necessarily fall upon the producer, and leave him no choice but to accept the one and eschew the other.
In the same way, when a workman succeeds in discovering an improved process in manufactures, the _immediate_ profit from the improvement results to him. This was necessary, in order to give his labour an intelligent direction; and it is just, because it is fair that an effort crowned with success should carry its recompense along with it.
But I maintain that these good or bad effects, though in their own nature permanent, are not permanent as regards the producer. If it had been so, a principle of progressive, and, therefore, of indefinite, inequality would have been introduced among men, and this is the reason why these good or evil effects become very soon absorbed in the general destinies of the human race.
How is this brought about? I shall show how it takes place by some examples.
Let us go back to the thirteenth century. The men who then devoted themselves to the art of copying received for the service which they rendered _a remuneration regulated by the general rate of earnings_.* Among them there arose one who discovered the means of multiplying copies of the same work rapidly. He invented printing.
In the first instance, one man was enriched, and many others were impoverished. At first sight, marvellous as the invention proves itself to be, we hesitate to decide whether it is hurtful or useful. It seems to introduce into the world, as I have said, an indefinite element of inequality. Guttemberg profits by his invention, and extends his invention with its profits indefinitely, until he has ruined all the copyists. As regards the public, in the capacity of consumer, it gains little; for Guttemberg takes care not to lower the price of his books, but just enough to undersell his rivals.