TOPICS OF TH DAN.
PROSPERITY AND DISTRESS.
POLITICAL economy, as expounded by RICARDO, MILL, and M`Cticoocu, would not explain the causes either of the recent prosperity or of the corning distress. Those writers recognized no other elements of wealth than Capital and Labour; they took no account whatever of tlie field of employment for capital and labour. Accolding to their view, capital is all in all : with suffi- cient capital, a nation must be prosperous. Facts have contra- .dieted them. All those " distresses" between 1816 and 1832, which led to Parliamentary Reform, took place notwithstanding a most rapid increase of the national capital. So great indeed was the increase of capital during that period, that we wasted hundreds of millions, probably, in foreign loans and specula- tions. What, then, could be the cause of so much " distress"— of those low profits and low wages which produced political dis- -content and Parliamentary Reform? The question has been answered by Dr. CHALMERS anti by the Author of England and America, who simultaneously announced a principle in political economy which fully explains the coincidence of low wages and low profits with rapidly increasing national wealth.. Seeing that deficiency of capital was not the cause of distress,—that during the whole period of distress capital had been increasing more than ever,—they set about inquiring whether the cause of low profits and wages might not be excess of capital. Hence the new doc- trine of superabundance of capital. Capital being heaped up in a limited field of employment,—being superabundant in propor- tion to the means of profitable investment,—falls under the law of competition, and competes with itself, till at last it yields but the minimum of profit. or may even be invested with loss. When, too, the field of employment for capital is limited, so that fresh accumulations cannot be profitably invested, there is a limit to the demand for labour ; which, if the labouring class continue to increase, must produce low wages. Population and capital, both together, may press upon the means of employing capital and labour; awl then we have that state of low wages and low profits, both together, which is called national distress. The theory appears entirely agreeable to the facts of our own case between 1816 and 1832.
According to those who see no elements of' wealth but capital and labour, profits and wages can never agree; for all reduction of profits, arising from the competition of capitalists, would take the shape of increased wages ; and the competition of labourers, by lowering wages, would increase profits. This doctrine, how- ever, is at variance with almost universal fact. The case of high profits with low wages, or high wages with low profits, is rare in- deed; while the cases are without end of concurrent low wages and low profits, and of concurrent high profits and high wages. In England, for example, both wages and profits are at must times very low; while in America they are nearly always very high. What actually occurs in the world, finds no explana- tion in the RICARDO theory of proportionate wages and profits ; but it is fully explained by allowing due weight to the third, or, perhaps we ought to say, the chief element of wealth. In Eng- land, the field for the profitable investment of capital is limited by Corn-laws : in America, it is continually enlarged with every in- crease of capital. This new view of the circumstances which determine the rates of profit and wages, is of great importance to our own country at the present time. If, as the RICARDO school of economists allege, profits depend upon wages, and wages upon profits, the two classes of capitalists and labourers have adverse interests; it must be for the advantage of' the labourer that profits should be low, and for that of the capitalist that wages should below; whereas if, as seems to be generally the case, wages and profits are both together either high or low, then the capitalist and the labourer have one and the same interest. With a sufficient field for the profitable invest- ment of' increasing capital, profits and wages, both together, will be continually high ; the produce of all capital, in a word, will be so large as to give plenty for profit and plenty for wages: but
ir capital, as well as population, presses upon, the field of invest-
ment,—if capital and the class of labourers increase faster than the field of investment is enlarged,—then labourers and capitalists will suffer equally, because, through the law of competition, no portion of capital will yield enough for either high wages or high profits. According to the doctrine of proportionate profits and wages, capitalists and labourers are natural enemies; according to the new view of this subject, master and man ought to be the best of friends, seeing that what is good or evil for one class, must be precisely the same for the other. If a state of heavy economi- cal adversity should come upon us in the midst of a state of po- litical transition, nothing but a general belief in the above doc- trine will preserve the peace.
In attributing our great economical prosperity during the last few, years to an enlargement of the field of employment for capi-
tal and labour, not only do we furnish the strongest argument in favour of union between capitalists and labourers, but we may see clearly the objects to which the force of that union ought to be directed. In what way, then, it may be asked, has the British field of investment for capital been enlarged (luring the last three or four years? The question was anticipated in our Number of the 7th of May. Very great improvements of agriculture, and especially in Ireland, together with a series of extraordinary
fine seasons, have so augmented the quantity of British food, that the effect has been the same fur Britain as if her territory had been increased or her Corn-laws repealed. This great increase of food has enlarged the basis of industrious operations, giving life, activity, ard profit, to tens of millions of capital which would otherwise have wasted away in the shape of loss either at home or abroad. But the process of a yearly augmentation of food from our own soil could not continue long. The cheapness of wheat, for example, arising from a great increase of quantity, had the effect last year of inducing very many farmers to abstain from sowing wheat : so that, even if the season had been favourable this year, the quantity of wheat would have been much less than heretofore. But we have had, besides, a very bad season for all kinds of grain and other food for both man and beast. The quan- tity of thud for next year—the extent of' the foundation nf indus- strious operations—will be less than before, while the capital and population, which have grown with the increase of food, are greater than ever. The cause of " prosperity" was an alteration for tie better in the proportion between capital and the field of employment; and an alteration for the worse in that same pro- portion, threatens a period of great "distress? If, then, the opposite states of prosperity and distress may be traced to different proportions between capital and the field of in- vestment—prosperity to an enlargement, and distress to a reduc- tion of the proportion which food bears to capital and labour—we see at once, that a country like this must, so long as she has Corn- laws, be subject to a state of low profits and low wages, or distress, interrupted occasionally by prosperity arising from veto productive seasons and agricultural improvements. A country of limited extent like this, already full to overflowing of capital and people, cannot for any great number of years together enlarge her dome tic field for the employment of capital and labour. Bus her foreign field is all the world. By freely exchanging her manufactures for food, she mig)t, for generations to come, proceed unceasingly with the enlargement of her means for investing fresh millions of capital, so as to enjoy a state of uninterrupted prosperity. With Jut Corn- laws, such prosperity as we have enjoyed for the last three years might be prolonged for centuries. With Corn-laws, there is no
prospect but of severe distress. But perhaps the distress will re- move the Corn-laws. In that great object for manufacturing and trading Britain, master and man are equally interested ; and it would be cheaply purchased by a year or two of economical suffer- ing such as that which is coming upon us.
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