Adam Smith · Complete work
Book IV, Chapter IX, 2
Book IV, Chapter IX, 2 of 152. Read it here for reference, or continue through the entire work without leaving the reader.
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Artificers, manufacturers, and merchants, can augment the revenue and wealth of their society by parsimony only; or, as it is expressed in this system, by privation, that is, by depriving themselves of a part of the funds destined for their own subsistence. They annually reproduce nothing but those funds. Unless, therefore, they annually save some part of them, unless they annually deprive themselves of the enjoyment of some part of them, the revenue and wealth of their society can never be, in the smallest degree, augmented by means of their industry. Farmers and country labourers, on the contrary, may enjoy completely the whole funds destined for their own subsistence, and yet augment, at the same time, the revenue and wealth of their society. Over and above what is destined for their own subsistence, their industry annually affords a neat produce, of which the augmentation necessarily augments the revenue and wealth of their society. Nations, therefore, which, like France or England, consist in a great measure, of proprietors and cultivators, can be enriched by industry and enjoyment. Nations, on the contrary, which, like Holland and Hamburgh, are composed chiefly of merchants, artificers, and manufacturers, can grow rich only through parsimony and privation. As the interest of nations so differently circumstanced is very different, so is likewise the common character of the people. In those of the former kind, liberality, frankness, and good fellowship, naturally make a part of their common character; in the latter, narrowness, meanness, and a selfish disposition, averse to all social pleasure and enjoyment.
The unproductive class, that of merchants, artificers, and manufacturers, is maintained and employed altogether at the expense of the two other classes, of that of proprietors, and of that of cultivators. They furnish it both with the materials of its work, and with the fund of its subsistence, with the corn and cattle which it consumes while it is employed about that work. The proprietors and cultivators finally pay both the wages of all the workmen of the unproductive class, and the profits of all their employers. Those workmen and their employers are properly the servants of the proprietors and cultivators. They are only servants who work without doors, as menial servants work within. Both the one and the other, however, are equally maintained at the expense of the same masters. The labour of both is equally unproductive. It adds nothing to the value of the sum total of the rude produce of the land. Instead of increasing the value of that sum total, it is a charge and expense which must be paid out of it.
The unproductive class, however, is not only useful, but greatly useful, to the other two classes. By means of the industry of merchants, artificers, and manufacturers, the proprietors and cultivators can purchase both the foreign goods and the manufactured produce of their own country, which they have occasion for, with the produce of a much smaller quantity of their own labour, than what they would be obliged to employ, if they were to attempt, in an awkward and unskilful manner, either to import the one, or to make the other, for their own use. By means of the unproductive class, the cultivators are delivered from many cares, which would otherwise distract their attention from the cultivation of land. The superiority of produce, which in consequence of this undivided attention, they are enabled to raise, is fully sufficient to pay the whole expense which the maintenance and employment of the unproductive class costs either the proprietors or themselves. The industry of merchants, artificers, and manufacturers, though in its own nature altogether unproductive, yet contributes in this manner indirectly to increase the produce of the land. It increases the productive powers of productive labour, by leaving it at liberty to confine itself to its proper employment, the cultivation of land; and the plough goes frequently the easier and the better, by means of the labour of the man whose business is most remote from the plough.
It can never be the interest of the proprietors and cultivators, to restrain or to discourage, in any respect, the industry of merchants, artificers, and manufacturers. The greater the liberty which this unproductive class enjoys, the greater will be the competition in all the different trades which compose it, and the cheaper will the other two classes be supplied, both with foreign goods and with the manufactured produce of their own country.
It can never be the interest of the unproductive class to oppress the other two classes. It is the surplus produce of the land, or what remains after deducting the maintenance, first of the cultivators, and afterwards of the proprietors, that maintains and employs the unproductive class. The greater this surplus, the greater must likewise be the maintenance and employment of that class. The establishment of perfect justice, of perfect liberty, and of perfect equality, is the very simple secret which most effectually secures the highest degree of prosperity to all the three classes.
The merchants, artificers, and manufacturers of those mercantile states, which, like Holland and Hamburgh, consist chiefly of this unproductive class, are in the same manner maintained and employed altogether at the expense of the proprietors and cultivators of land. The only difference is, that those proprietors and cultivators are, the greater part of them, placed at a most inconvenient distance from the merchants, artificers, and manufacturers, whom they supply with the materials of their work and the fund of their subsistence; are the inhabitants of other countries, and the subjects of other governments.
Such mercantile states, however, are not only useful, but greatly useful, to the inhabitants of those other countries. They fill up, in some measure, a very important void; and supply the place of the merchants, artificers, and manufacturers, whom the inhabitants of those countries ought to find at home, but whom, from some defect in their policy, they do not find at home.
It can never be the interest of those landed nations, if I may call them so, to discourage or distress the industry of such mercantile states, by imposing high duties upon their trade, or upon the commodities which they furnish. Such duties, by rendering those commodities dearer, could serve only to sink the real value of the surplus produce of their own land, with which, or, what comes to the same thing, with the price of which those commodities are purchased. Such duties could only serve to discourage the increase of that surplus produce, and consequently the improvement and cultivation of their own land. The most effectual expedient, on the contrary, for raising the value of that surplus produce, for encouraging its increase, and consequently the improvement and cultivation of their own land, would be to allow the most perfect freedom to the trade of all such mercantile nations.
This perfect freedom of trade would even be the most effectual expedient for supplying them, in due time, with all the artificers, manufacturers, and merchants, whom they wanted at home; and for filling up, in the properest and most advantageous manner, that very important void which they felt there.
The continual increase of the surplus produce of their land would, in due time, create a greater capital than what would be employed with the ordinary rate of profit in the improvement and cultivation of land; and the surplus part of it would naturally turn itself to the employment of artificers and manufacturers, at home. But these artificers and manufacturers, finding at home both the materials of their work and the fund of their subsistence, might immediately, even with much less art and skill be able to work as cheap as the little artificers and manufacturers of such mercantile states, who had both to bring from a greater distance. Even though, from want of art and skill, they might not for some time be able to work as cheap, yet, finding a market at home, they might be able to sell their work there as cheap as that of the artificers and manufacturers of such mercantile states, which could not be brought to that market but from so great a distance; and as their art and skill improved, they would soon be able to sell it cheaper. The artificers and manufacturers of such mercantile states, therefore, would immediately be rivalled in the market of those landed nations, and soon after undersold and justled out of it altogether. The cheapness of the manufactures of those landed nations, in consequence of the gradual improvements of art and skill, would, in due time, extend their sale beyond the home market, and carry them to many foreign markets, from which they would, in the same manner, gradually justle out many of the manufacturers of such mercantile nations.
This continual increase, both of the rude and manufactured produce of those landed nations, would, in due time, create a greater capital than could, with the ordinary rate of profit, be employed either in agriculture or in manufactures. The surplus of this capital would naturally turn itself to foreign trade and be employed in exporting, to foreign countries, such parts of the rude and manufactured produce of its own country, as exceeded the demand of the home market. In the exportation of the produce of their own country, the merchants of a landed nation would have an advantage of the same kind over those of mercantile nations, which its artificers and manufacturers had over the artificers and manufacturers of such nations; the advantage of finding at home that cargo, and those stores and provisions, which the others were obliged to seek for at a distance. With inferior art and skill in navigation, therefore, they would be able to sell that cargo as cheap in foreign markets as the merchants of such mercantile nations; and with equal art and skill they would be able to sell it cheaper. They would soon, therefore, rival those mercantile nations in this branch of foreign trade, and, in due time, would justle them out of it altogether.
According to this liberal and generous system, therefore, the most advantageous method in which a landed nation can raise up artificers, manufacturers, and merchants of its own, is to grant the most perfect freedom of trade to the artificers, manufacturers, and merchants of all other nations. It thereby raises the value of the surplus produce of its own land, of which the continual increase gradually establishes a fund, which, in due time, necessarily raises up all the artificers, manufacturers, and merchants, whom it has occasion for.
When a landed nation on the contrary, oppresses, either by high duties or by prohibitions, the trade of foreign nations, it necessarily hurts its own interest in two different ways. First, by raising the price of all foreign goods, and of all sorts of manufactures, it necessarily sinks the real value of the surplus produce of its own land, with which, or, what comes to the same thing, with the price of which, it purchases those foreign goods and manufactures. Secondly, by giving a sort of monopoly of the home market to its own merchants, artificers, and manufacturers, it raises the rate of mercantile and manufacturing profit, in proportion to that of agricultural profit; and, consequently, either draws from agriculture a part of the capital which had before been employed in it, or hinders from going to it a part of what would otherwise have gone to it. This policy, therefore, discourages agriculture in two different ways; first, by sinking the real value of its produce, and thereby lowering the rate of its profits; and, secondly, by raising the rate of profit in all other employments. Agriculture is rendered less advantageous, and trade and manufactures more advantageous, than they otherwise would be; and every man is tempted by his own interest to turn, as much as he can, both his capital and his industry from the former to the latter employments.
Though, by this oppressive policy, a landed nation should be able to raise up artificers, manufacturers, and merchants of its own, somewhat sooner than it could do by the freedom of trade; a matter, however, which is not a little doubtful; yet it would raise them up, if one may say so, prematurely, and before it was perfectly ripe for them. By raising up too hastily one species of industry, it would depress another more valuable species of industry. By raising up too hastily a species of industry which duly replaces the stock which employs it, together with the ordinary profit, it would depress a species of industry which, over and above replacing that stock, with its profit, affords likewise a neat produce, a free rent to the landlord. It would depress productive labour, by encouraging too hastily that labour which is altogether barren and unproductive.
In what manner, according to this system, the sum total of the annual produce of the land is distributed among the three classes above mentioned, and in what manner the labour of the unproductive class does no more than replace the value of its own consumption, without increasing in any respect the value of that sum total, is represented by Mr Quesnai, the very ingenious and profound author of this system, in some arithmetical formularies. The first of these formularies, which, by way of eminence, he peculiarly distinguishes by the name of the Economical Table, represents the manner in which he supposes this distribution takes place, in a state of the most perfect liberty, and, therefore, of the highest prosperity; in a state where the annual produce is such as to afford the greatest possible neat produce, and where each class enjoys its proper share of the whole annual produce. Some subsequent formularies represent the manner in which he supposes this distribution is made in different states of restraint and regulation; in which, either the class of proprietors, or the barren and unproductive class, is more favoured than the class of cultivators; and in which either the one or the other encroaches, more or less, upon the share which ought properly to belong to this productive class. Every such encroachment, every violation of that natural distribution, which the most perfect liberty would establish, must, according to this system, necessarily degrade, more or less, from one year to another, the value and sum total of the annual produce, and must necessarily occasion a gradual declension in the real wealth and revenue of the society; a declension, of which the progress must be quicker or slower, according to the degree of this encroachment, according as that natural distribution, which the most perfect liberty would establish, is more or less violated. Those subsequent formularies represent the different degrees of declension which, according to this system, correspond to the different degrees in which this natural distribution of things is violated.
Musean translation
Mouseia’s complete machine-assisted Musean translation, made directly from the complete English text of all five books for fidelity, the author’s force and cadence, and modern clarity.
Artisans, manufacturers, and merchants can increase the revenue and wealth of their society only by saving—or, as this system puts it, by privation: by denying themselves part of the funds intended for their own subsistence. Each year they reproduce nothing beyond those funds. Unless, therefore, they save some part of them each year, foregoing the enjoyment of it, their industry cannot increase their society’s revenue and wealth in even the slightest degree. Farmers and agricultural laborers, by contrast, can enjoy all the funds intended for their subsistence and still increase their society’s revenue and wealth. Beyond what supports them, their industry yields an annual net produce; an increase in that produce necessarily increases the society’s revenue and wealth. Nations such as France and England, then, composed largely of landowners and cultivators, can grow wealthy through industry and enjoyment. Nations such as Holland and Hamburgh, composed chiefly of merchants, artisans, and manufacturers, can grow wealthy only through thrift and privation. As the interests of nations in these different circumstances differ greatly, so do the prevailing characters of their people. In the former, generosity, candor, and good fellowship naturally enter into the common character; in the latter, narrowness, meanness, and a selfish aversion to social pleasure and enjoyment.
The unproductive class—the merchants, artisans, and manufacturers—is supported and employed entirely at the expense of the other two classes, the landowners and the cultivators. These supply both the materials on which it works and the funds on which it subsists: the grain and livestock it consumes while working. Landowners and cultivators ultimately pay both the wages of every worker in the unproductive class and the profits of every employer. Those workers and employers are, properly speaking, servants of the landowners and cultivators. They are simply servants who work outdoors, as domestic servants work indoors. Both are supported at the expense of the same masters, and the labor of both is equally unproductive. It adds nothing to the total value of the land’s raw produce. Rather than increasing that total, it is a charge and expense paid out of it.
Yet the unproductive class is not merely useful to the other two classes; it is immensely useful. Through the industry of merchants, artisans, and manufacturers, landowners and cultivators can buy both foreign goods and the manufactured products of their own country that they need with the produce of far less of their own labor than they would have to devote to importing the former or making the latter themselves, awkwardly and without skill. The unproductive class relieves cultivators of many cares that would otherwise draw their attention away from cultivating the land. The additional produce they can raise through this undivided attention is amply sufficient to cover the entire cost of supporting and employing the unproductive class, whether borne by the landowners or by themselves. Thus the industry of merchants, artisans, and manufacturers, though by its nature wholly unproductive, indirectly helps increase the produce of the land. It increases the productive power of productive labor by leaving it free to concentrate on its proper work, cultivating the land; and the plow often moves more easily and effectively thanks to the labor of a person whose occupation is farthest removed from the plow.
It can never serve the interests of landowners and cultivators to restrain or discourage the industry of merchants, artisans, and manufacturers in any respect. The greater the freedom this unproductive class enjoys, the greater the competition among all its trades, and the more cheaply the other two classes will obtain both foreign goods and the manufactured products of their own country.
Nor can it ever serve the interests of the unproductive class to oppress the other two. The surplus produce of the land—what remains after providing first for the cultivators and then for the landowners—supports and employs the unproductive class. The larger that surplus, the greater the support and employment of that class. Perfect justice, perfect liberty, and perfect equality: their establishment is the very simple secret that most effectively secures the greatest prosperity for all three classes.
The merchants, artisans, and manufacturers of mercantile states such as Holland and Hamburgh, composed chiefly of this unproductive class, are likewise supported and employed wholly at the expense of landowners and cultivators. The only difference is that most of those landowners and cultivators live at a most inconvenient distance from the merchants, artisans, and manufacturers whom they supply with materials and subsistence: they inhabit other countries and are subjects of other governments.
Yet these mercantile states are not merely useful to the inhabitants of those other countries; they are immensely useful. They fill, to some degree, an important gap, taking the place of the merchants, artisans, and manufacturers whom those inhabitants ought to find at home but, through some defect in their policy, do not.
It can never serve the interests of these landed nations, if I may call them that, to discourage or hamper the industry of mercantile states by imposing high duties on their trade or the goods they provide. Such duties, by making those goods more expensive, can only lower the real value of the surplus produce of their own land with which the goods are purchased—or, what amounts to the same thing, whose price pays for them. Such duties can only discourage the growth of that surplus and, consequently, the improvement and cultivation of their own land. The most effective way, by contrast, to raise the value of that surplus, encourage its growth, and thus improve and cultivate their own land is to give the trade of all such mercantile nations complete freedom.
Complete freedom of trade would even be the most effective way, in time, to provide them with all the artisans, manufacturers, and merchants they lacked at home, filling that important gap in the most suitable and advantageous manner.
A continual increase in their land’s surplus produce would eventually create more capital than could be employed in improving and cultivating land at the ordinary rate of profit; the excess would naturally turn to employing artisans and manufacturers at home. Finding both their materials and their means of subsistence at home, these artisans and manufacturers might at once produce as cheaply, even with much less skill and craftsmanship, as the small artisans and manufacturers of mercantile states, who must bring both from farther away. Even if a lack of skill prevented them from producing as cheaply for a time, a home market would let them sell their work there as cheaply as the work of those mercantile artisans and manufacturers, whose goods could reach it only after a long journey. As their skills improved, they would soon be able to sell for less. They would therefore immediately compete with the artisans and manufacturers of the mercantile states in the landed nations’ markets, then soon undercut and displace them entirely. As improvements in skill and craftsmanship made the landed nations’ manufactures cheaper, their sales would in time reach beyond the home market into many foreign markets, from which they would likewise gradually displace many of the mercantile nations’ manufacturers.
The continual increase in both the raw and manufactured produce of these landed nations would eventually create more capital than could be employed in agriculture or manufacturing at the ordinary rate of profit. The surplus capital would naturally turn to foreign trade, exporting the portions of the country’s raw and manufactured produce that exceeded demand at home. In exporting their own country’s produce, the merchants of a landed nation would enjoy the same sort of advantage over merchants of mercantile nations as its artisans and manufacturers enjoyed over theirs: they would find at home the cargo, stores, and provisions that the others had to seek at a distance. Thus, even with less skill in navigation, they could sell that cargo as cheaply in foreign markets as the merchants of mercantile nations; with equal skill, they could sell it more cheaply. They would soon rival those nations in this branch of foreign trade and eventually displace them altogether.
Under this liberal and generous system, therefore, the most advantageous way for a landed nation to develop its own artisans, manufacturers, and merchants is to grant complete freedom of trade to those of every other nation. In doing so, it raises the value of its own land’s surplus produce. The continual growth of that produce gradually establishes a fund that must, in time, bring forth all the artisans, manufacturers, and merchants it needs.
When a landed nation instead burdens the trade of foreign nations with high duties or prohibitions, it necessarily harms its own interests in two ways. First, by raising the price of all foreign goods and every kind of manufactured product, it necessarily lowers the real value of the surplus produce of its own land with which it buys them—or, what amounts to the same thing, whose price pays for them. Second, by granting its own merchants, artisans, and manufacturers a kind of monopoly over the home market, it raises mercantile and manufacturing profits relative to agricultural profits. It consequently draws away some capital previously employed in agriculture, or prevents some capital from going there that otherwise would have done so. This policy thus discourages agriculture in two ways: first, by reducing the real value of its produce and thereby lowering its rate of profit; second, by raising the rate of profit in every other occupation. Agriculture becomes less advantageous, and trade and manufacturing more advantageous, than they would otherwise be; each person’s interest tempts him to turn as much of his capital and industry as he can from the former to the latter.
Even if this oppressive policy enabled a landed nation to develop artisans, manufacturers, and merchants of its own somewhat sooner than freedom of trade would—a matter far from certain—it would bring them forth prematurely, before the nation was fully ready for them. In hastily promoting one kind of industry, it would depress another and more valuable kind. It would hastily promote an industry that replaces the stock employing it, together with the ordinary profit, while depressing one that not only replaces that stock and its profit but also yields a net produce, a free rent for the landowner. By encouraging barren and unproductive labor too hastily, it would depress productive labor.
Mr Quesnai, the ingenious and profound author of this system, sets out in several arithmetic formulas how, according to it, the total annual produce of the land is distributed among the three classes just mentioned, and how the labor of the unproductive class merely replaces the value of its own consumption without adding anything to that total. The first formula, which he singles out under the name of the Economical Table, shows how he supposes this distribution to take place under perfect liberty and therefore at the height of prosperity: when the annual produce yields the greatest possible net produce and each class receives its proper share of the whole. Later formulas show how he supposes it to occur under various restrictions and regulations, when either the landowning class or the barren and unproductive class is favored over the cultivators, and one or the other encroaches to some degree on the share properly belonging to that productive class. According to this system, every such encroachment, every violation of the natural distribution established by perfect liberty, must diminish, to a greater or lesser degree from year to year, the value and total amount of the annual produce. It must bring about a gradual decline in the society’s real wealth and revenue, progressing faster or slower according to how severely that natural distribution is violated. The later formulas represent the differing degrees of decline corresponding, in this system, to the differing degrees of violation of that natural distribution.
Plain English translation
Mouseia’s complete Plain English edition, made independently and directly from the complete English text of all five books.
Artisans, manufacturers, and merchants can add to their society's revenue and wealth only by saving. In this system's terms, they must go without something: they must give up part of the funds meant to support them. Each year they reproduce only those funds. So unless they save some of them each year and give up some of what they could enjoy, their work cannot increase their society's revenue and wealth at all. Farmers and farmworkers, by contrast, can use up all the funds meant to support them and still increase their society's revenue and wealth. Beyond what they need to live on, their work produces a net product every year. Any increase in that product necessarily increases their society's revenue and wealth. Nations made up largely of landowners and farmers, such as France or England, can therefore grow rich through work and enjoyment. Nations made up chiefly of merchants, artisans, and manufacturers, such as Holland and Hamburgh, can grow rich only through saving and self-denial. Just as the interests of nations in these different situations differ, so do the usual traits of their people. In the first kind, generosity, openness, and friendliness naturally become common traits. In the second, narrowness, pettiness, and selfishness take hold, along with an aversion to social pleasures and enjoyment.
The unproductive class—the merchants, artisans, and manufacturers—is supported and employed entirely at the expense of the other two classes, landowners and farmers. These two classes supply both its raw materials and the funds that support it: the grain and livestock it consumes while working. Ultimately, landowners and farmers pay both the wages of every worker in the unproductive class and the profits of every employer in it. Those workers and employers are really servants of the landowners and farmers. They are simply servants who work outdoors, just as household servants work indoors. Both kinds are supported at the expense of the same masters. Both kinds of labor are equally unproductive. Neither adds anything to the total value of the land's raw produce. Rather than increasing that value, their labor is a cost paid out of it.
Even so, the unproductive class is not just useful to the other two classes; it is extremely useful. Thanks to the work of merchants, artisans, and manufacturers, landowners and farmers can get the foreign goods and domestically made products they need in exchange for much less of their own labor's produce. Otherwise they would have to import or make these goods for themselves, clumsily and without skill. The unproductive class also frees farmers from many concerns that would distract them from cultivating the land. By concentrating on farming, they raise enough additional produce to cover the whole cost of supporting and employing that class, whether landowners or farmers bear the cost. Though the work of merchants, artisans, and manufacturers is itself entirely unproductive, it therefore helps indirectly to increase the land's produce. It raises the productive power of productive labor by allowing farmers to focus on cultivating land. Often the plow moves more easily and does better work because of the labor of someone whose job is far removed from a plow.
It can never benefit landowners and farmers to restrict or discourage the work of merchants, artisans, and manufacturers in any way. The more freedom this unproductive class has, the more competition there will be in all its trades. The other two classes will then get both foreign goods and domestic manufactures more cheaply.
Nor can it benefit the unproductive class to oppress the other two. That class is supported and employed by the land's surplus produce: what remains after first providing for farmers and then for landowners. The larger the surplus, the more support and employment the unproductive class receives. Perfect justice, perfect liberty, and perfect equality are the simple secret to ensuring the greatest prosperity for all three classes.
The merchants, artisans, and manufacturers in trading states such as Holland and Hamburgh, which consist chiefly of this unproductive class, are likewise supported and employed entirely at the expense of landowners and farmers. The difference is that most of those landowners and farmers live at a very inconvenient distance from the people they supply with raw materials and with funds for their support. They live in other countries and are governed by other governments.
Still, these trading states are extremely useful to the inhabitants of those other countries. They partly fill an important gap: they supply the merchants, artisans, and manufacturers whom those inhabitants ought to have at home but lack because of some fault in their policies.
It can never benefit these landowning nations, if I may call them that, to discourage or harm the trading states' industries by imposing high duties on their trade or goods. Such duties make the goods dearer. They can only lower the real value of the surplus produce of the land, with which the goods are bought, whether directly or with the money received for that produce. They can only discourage growth in that surplus, and therefore discourage improvement and cultivation of the land. To raise the value of the surplus and encourage its growth, along with improvement and cultivation, the most effective course would instead be to give the trade of all such trading nations complete freedom.
Complete freedom of trade would also be the most effective way, in time, to bring these landowning nations all the artisans, manufacturers, and merchants they needed at home. It would fill their important gap in the most suitable and beneficial way.
As the surplus produce of their land kept growing, these nations would eventually accumulate more capital than could earn the ordinary rate of profit from improving and cultivating land. The excess would naturally go into employing artisans and manufacturers at home. These workers would find both their raw materials and their means of support nearby. Even with much less skill, they might immediately be able to produce as cheaply as the small artisans and manufacturers in trading states, who must bring both from farther away. Even if a lack of skill kept them from producing as cheaply for a while, they would have a nearby market. They could sell there as cheaply as the traders' artisans and manufacturers, whose goods had to travel a great distance to reach it. As their skills improved, they would soon sell more cheaply. The trading states' artisans and manufacturers would thus immediately face competition in the landowning nations' markets. Soon they would be undersold and pushed out altogether. As improved skills gradually lowered the price of the landowning nations' manufactures, sales would eventually spread beyond the home market into many foreign markets. There, too, these producers would gradually push out many manufacturers from trading nations.
As both raw and manufactured produce kept increasing in these landowning nations, they would eventually have more capital than agriculture and manufacturing could employ at the ordinary rate of profit. The excess capital would naturally go into foreign trade. It would export the nation's raw and manufactured goods that exceeded demand at home. In exporting their own country's produce, the merchants of a landowning nation would have the same sort of advantage over trading nations' merchants that its artisans and manufacturers had over theirs. The landowning nation's merchants could find their cargo, stores, and provisions at home, while the others had to seek them far away. Even with less skill in navigation, they could therefore sell that cargo just as cheaply in foreign markets as the trading nations' merchants. With equal skill, they could sell it more cheaply. Soon they would compete with the trading nations in this branch of foreign trade, and eventually push them out altogether.
Under this open and generous system, then, the best way for a landowning nation to develop its own artisans, manufacturers, and merchants is to give those of every other nation complete freedom of trade. This raises the value of its own land's surplus produce. The continuing growth of that surplus gradually builds a fund that, in time, necessarily brings forth all the artisans, manufacturers, and merchants the nation needs.
When a landowning nation instead restricts foreign trade with high duties or bans, it necessarily harms its own interests in two ways. First, it raises the price of all foreign goods and every kind of manufacture. This lowers the real value of the surplus produce of its own land, which it uses to buy those goods and manufactures, either directly or with the money earned from selling the produce. Second, it gives its own merchants, artisans, and manufacturers a kind of monopoly over the home market. This raises profits from trade and manufacturing relative to profits from agriculture. It therefore either draws capital out of agriculture or stops capital that would otherwise enter it. This policy discourages agriculture in two ways: by lowering the real value of its produce, and thus its rate of profit; and by raising the rate of profit in every other occupation. Agriculture becomes less profitable, while trade and manufacturing become more profitable, than they would otherwise be. Everyone's self-interest then leads them to shift as much capital and work as they can from agriculture to the other occupations.
Even if this restrictive policy let a landowning nation develop its own artisans, manufacturers, and merchants somewhat sooner than free trade would—a claim that is quite doubtful—it would develop them prematurely, before it was ready for them. By promoting one kind of industry too quickly, it would weaken a more valuable kind. It would promote an industry that replaces the stock invested in it, along with the ordinary profit, at the expense of one that also yields a net product beyond replacing that stock and its profit: a rent freely available to the landowner. By encouraging barren, unproductive labor too soon, it would weaken productive labor.
Mr Quesnai, the highly ingenious and thoughtful author of this system, uses several sets of arithmetic formulas to show how, in his view, the total annual produce of the land is divided among the three classes just described. They also show how the unproductive class's labor only replaces the value of what that class consumes and does not increase the total value at all. He gives the first set the special name Economical Table. It shows how he thinks the produce is divided under perfect liberty, and therefore the greatest prosperity. In that state, annual produce yields the greatest possible net product, and each class receives its proper share of the whole. Later sets of formulas show how he thinks the produce is divided under various restrictions and regulations. In those conditions, either landowners or the barren, unproductive class is favored over farmers, and one or the other takes part of the share that properly belongs to the productive class. In this system, each such encroachment violates the natural division that perfect liberty would establish. It must therefore reduce, to some extent, both the value and the total amount of annual produce from one year to the next. It must bring about a gradual decline in society's real wealth and revenue. That decline will be faster or slower depending on how far the encroachment goes, and thus on how far the division established by perfect liberty is violated. The later formulas show the differing degrees of decline that this system associates with differing degrees of violation of that natural division.