"The augmented productiveness of your estate, and the increased amount of capital at which it will be estimated, must go on together.But, to add to capital, it is necessary to save from revenue.Now the scheme you are about to embark in requires first a large expenditure of revenue.It must therefore tend to prevent your augmenting your capital, and consequently the productive industry of your estate, which two things always go on together."The answer to this reasoning would be: "It is chiefly because I am aware that the productiveness of my estate, and what it is worth, are inseparably conjoined, that 1 am about to be at this expense and trouble, for I believe they will enable me to put things in such a train that its productiveness will greatly increase, and, as its value I know depends on the.revenue it yields, my capital will consequently be augmented by much more than the sum I am going to expend.""I perceive I have not expressed my meaning properly," replies the adviser, "I should have said; an increased productiveness of your estate, can be produced by no other means than by an augmentation of the capital employed on it, and the amount of capital you can possess and can employ on it, can be augmented in no other way than by saving from your revenue.But this plan of yours causes an expenditure of your revenue, it must therefore prevent you from adding to your capital, and, consequently, from increasing the productiveness of the industry which is set in motion by it on your estate."The West India proprietor might undoubtedly reply: "My dear Sir you are completely wrong.The productiveness of my estate depends, not only on the amount of the capital which sets the industry employed on it in motion, but on the sort of motion it gives it; and I hope so to improve this, by a more judicious regulation of it, that the same power will produce a far greater effect than it does at present, and thus to show you, that there are other means of augmenting capital than simple saving.For I take it, that if I add to my gains, without increasing my expenditure, the procedure may be just as effective to this end, as if I were to diminish my expenditure, and not add to my gains.
If we understand the axioms of our author in the former sense of the expressions, it is clear, that when applied to national capital, they prove nothing more than when applied to individual capital.
For, if it be merely meant that the productiveness of national industry, and the augmentation of national capital advance together, the propriety of a proposed measure may as well be inferred from its tendency to render the industry of the community more productive, as its impropriety may be inferred from its requiring a small immediate expenditure of revenue.The question to be determined in every such case, would then be similar to that which an individual determines when deliberating on any scheme for the augmentation of his private capital, and would resolve itself into an inquiry, whether or not the probable returns from the proposed measure, be likely to be a sufficient remuneration for the expense of carrying it into effect.But, it is very clear, that this would be a constrained interpretation of the import of the passage; and that the inference the author wished his expressions to convey, is, that an increased productiveness of the industry of the society can be produced by no other means but by augmenting its capital, and that the only means entering into the process of augmenting its capital are saving from its revenue.
The proper answer to these axioms, so understood, is, this is your theory no doubt, but it is a theory which is merely in process of proof, and not yet established.Surely, then, it is scarce logical to answer a very obvious objection to it, which the observation of human affairs presents, by assuming its truth; or, to deduce the impropriety of a practical measure, drawn from the phenomena which human affairs present, and apparently very beneficial, by showing that such measure is contrary to its principles.
The question hitherto stands thus.You pretend to account for the phenomena of the augmentation of national wealth by showing, that an increase of national capital tends to facilitate the division of labor; that this division of labor in itself greatly improves the productive powers of labor, and is the cause of all other improvements in them.That this increase of the productive powers of labor, being equivalent to an increase of the revenue of the society, adds to its power of accumulating fresh capital and giving farther extent to the division of labor, the great generator, according to your system, of all wealth.It is in this way that, according to you, the augmentation of the industry of the society is produced by an augmentation of its capital, and in no other manner, and its capital augmented by saving from revenue and nothing else, and that, from the action and reaction of these principles on each other, the whole phenomena of the growth of national capital are deducible.
Now, admitting for the present that no fallacy can be detected m the principles themselves, they must still be admitted to be only possible or probable theoretical assumptions, to be proved by the observation of their coincidence with facts.Admitting then also that., as far as the facts which relate to what we may call the history of the internal progress of national wealth are concerned, they sufficiently accord with them, there is another class of facts admitted by you, which these principles do not explain, and to which, on the contrary, they seem to be opposed.
