It is come to by setting out from it.Two general axioms, somewhat ambiguous and vague, are assumed as truths.As usually happens to all other axioms employed in general reasoning, and capable of conveying two senses, they are granted in the one sense, and applied in the other.We assent to the propositions, "the industry of the society can augment only in proportion as its capital augments, and its capital can augment only in proportion to what can be gradually saved out of its revenue," because we see, that the augmentation of industry and capital, the saving from revenue and increase of capital, are concomitants of each other; we perceive not, that in the application of these propositions, the sense in which we assented to them is abandoned, and that the augmentation of the capital of the society is assumed as the cause, and the sole cause of the increase of its industry, and the saving from revenue, as the cause, and the sole cause, of the augmentation of its capital.Whereas, from the observation of the increase of the productiveness of national industry, and of the amount of national capital, going on in general together, we may at least as justly infer that it is the industry which augments the capital, as the capital the industry, and rather come to the conclusion, that part of the national resources should be employed in giving perfection to the industry of the society than that they should be altogether devoted to attempts to increase its capital.In fact, as capital, according to Adam Smith himself, is only valuable for the addition it makes to the efficiency of the national industry, and, as that efficiency is also, according to him, mainly dependent on the skill, dexterity, and judgment, with which it is applied, an expenditure of capital or revenue, having the effect of increasing the national skill, dexterity, and judgment, would seem to be the most judicious possible, seeing it directly increases those sources of production, from the indirect addition that it makes to which, capital is said to derive its sole value.
It has been my endeavor to show, in the preceding examination of the system of Adam Smith, that the doctrine there maintained, of the expediency of the legislator's abstaining from any attempt to give increased efficiency to the industry of the society by encouraging the growth of domestic arts or the importation of foreign, founded on the supposition of the perfect identity of the means which add to the wealth of individuals and nations, is erroneous.
1.That the reasons which make it assume the form of a self-evident principle, have their foundation in the ambiguities of language alone, and that, in reality, the presumption is against, not for it.
2.That viewed as a consequence of the theory of the accumulation of capital, the division of labor, and the improvements resulting from the action and reaction of these principles on each other, the judgment we form of it must be altogether determined by the probable accuracy of the principles on which that theory proceeds, and by its coincidence with facts;that granting, for the present, the apparent probability of the theoretical principles themselves, they nevertheless do not agree with the phenomena;that there is a class of admitted facts, which they not only do not explain, but to which they are in opposition; that the increase of the wealth of every community is acknowledged to be dependent, not only on the accumulation of capital and division of labor among its members, but also on the progress of arts in other communities, and their subsequent transfer to it; that to effect this transfer, a measure admitted to be all-important to the prosperity of the community, the efforts of individuals are insufficient, that, in his endeavors to prove that the legislator ought not here to interfere, Adam Smith runs into inconsistencies and contradictions, and that there hence arises a proof of the inapplicability of his doctrine to events of this order, and a strong presumption of the existence of some fundamental error in the general principles of his system.
