Do you desire to be in a situation to decide between liberty and
protection? Do you desire to appreciate the impact of an economic phenomenon?
Inquire into its effects upon the abundance or scarcity of commodities, and
not upon the rise or fall of prices. Distrust nominal prices; they will only
land you in an inextricable labyrinth.
Mr. Matthieu de Dombasle, after having shown that protection raises
prices, adds:
"The enhancement of prices increases the expense of living, and
consequently the price of labor, and each man receives, in the enhanced price
of his products, compensation for the higher prices he has been obliged to
pay for the things he has occasion to buy. Thus, if everyone pays more as a
consumer, everyone receives more as a producer."
It is evident that we could reverse this argument, and say:
"If everyone receives more as a producer, everyone pays more as a
consumer."
Now, what does this prove? Nothing but this, that protection displaces
wealth uselessly and unjustly. In so far, it simply perpetrates spoliation.
Again, to conclude that this vast apparatus leads to simple compensations,
we must stick to the "consequently" of Mr. de Dombasle, and make
sure that the price of labor will not fail to rise with the price of the
protected products. This is a question of fact that I remit to Mr. Moreau de
Jonnes, that he may take the trouble to find out whether the rate of wages
advances along with the price of shares in the coal mines of Anzin. For my
own part, I do not believe that it does; because, in my opinion, the price of
labor, like the price of everything else, is governed by the relation of
supply to demand. Now, I am convinced that restriction diminishes the supply
of coal, and consequently enhances its price; but I do not see so clearly
that it increases the demand for labor, so as to enhance the rate of wages;
and that this effect should be produced is all the less likely, because the
quantity of labor demanded depends on the available capital. Now, protection
may indeed displace capital, and cause its transference from one employment
to another, but it can never increase it by a single farthing.
But this question, which is one of the greatest interest and importance,
will be examined in another place. I return to the subject of nominal price;
and I maintain that it is not one of those absurdities that can be rendered
specious by such reasonings as those of Mr. de Dombasle.
Put the case of a nation that is isolated, and possesses a given amount of
specie, and that chooses to amuse itself by burning each year one-half of all
the commodities that it possesses. I undertake to prove that, according to
the theory of Mr. de Dombasle, it will not be less rich.
In fact, in consequence of the fire, all things will be doubled in price,
and the inventories of property, made before and after the destruction, will
show exactly the same nominal value. But then what will the country in
question have lost? If John buys his cloth dearer, he also sells his corn at
a higher price; and if Peter loses on his purchase of corn, he retrieves his
losses by the sale of his cloth. "Each recovers, in the extra price of
his products, the extra expense of living he has been put to; and if
everybody pays as a consumer, everybody receives a corresponding amount as a
producer."
All this is a jingling quibble, and not science. The truth, in plain
terms, is this: that men consume cloth and corn by fire or by using them, and
that the effect is the same as regards money, but not as regards wealth, for
it is precisely in the use of commodities that wealth or material prosperity
consists.
In the same way, restriction, while diminishing the abundance of things,
may raise their price to such an extent that each party shall be, pecuniarily
speaking, as rich as before. But to set down in an inventory three measures
of corn at 20s., or four measures at 15s., because the result is still 60s. —
would this, I ask, come to the same thing with reference to the satisfaction
of men's wants?
It is to this, the consumer's point of view, that I shall never cease to
recall the protectionists, for this is the end and design of all our efforts,
and the solution of all problems. I shall never cease to say to them: Is it,
or is it not, true that restriction by impeding exchanges, by limiting the
division of labor, by forcing labor to connect itself with difficulties of
climate and situation, diminishes ultimately the quantity of commodities
produced by a determinate amount of efforts? And what does this signify, it
will be said, if the smaller quantity produced under the regime of protection
has the same nominal value as that produced under the regime of liberty? The
answer is obvious. Man does not live upon nominal values, but upon real
products, and the more products there are, whatever be their price, the
richer he is.
In writing what precedes, I never expected to meet with an anti-economist
who was enough of a logician to admit, in so many words, that the wealth of
nations depends on the value of things, apart from the consideration of their
abundance. But here is what I find in the work of Mr. de Saint-Chamans (p.
210):
If fifteen million worth of commodities, sold to foreigners, are taken
from the total production, estimated at fifty millions, the thirty-five
million worth of commodities remaining, not being sufficient to meet the
ordinary demand, will increase in price, and rise to the value of fifty
millions. In that case the revenue of the country will represent a value of
fifteen million additional.… There would then be an increase of the wealth of
the country to the extent of fifteen million, exactly the amount of specie
imported.
This is a pleasant view of the matter! If a nation produces in one year,
from its agriculture and commerce, a value of 50 million it has only to sell
a quarter of it to the foreigner to be a quarter richer! Then if it sells the
half, it will be one-half richer! And if it should sell the whole, to its
last tuft of wool and its last grain of wheat, it would bring up its revenue
to 100 million. What a way of getting rich, by producing infinite dearness by
absolute scarcity!
Again, would you judge of the two doctrines? Submit them to the test of
exaggeration.
According to the doctrine of Mr. de Saint-Chamans, the French would be
quite as rich — that is to say, quite as well supplied with all things — had
they only a thousandth part of their annual products, because they would be
worth a thousand times more.
According to our doctrine, the French would be infinitely rich if their
annual products were infinitely abundant, and consequently, without any value
at all.
