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The National System of Political Economy (34)

Chapter 34

The Insular Supremacy and the German Commercial Union

What a great nation is at the present day without a vigorous commercial policy, and what she may become by the adoption of a vigorous commercial policy, Germany has learnt for herself during the last twenty years. Germany was that which Franklin once said of the State of New Jersey, ’a cask which was tapped and drained by its neighbours on every side.’ England, not contented with having ruined for the Germans the greater part of their own manufactories and supplied them with enormous quantities of cotton and woollen fabrics, excluded from her ports German grain and timber, nay from time to time also even German wool. There was a time when the export of manufactured goods from England to Germany was ten times greater than that to her highly extolled East Indian Empire. Nevertheless the all-monopolising islanders would not even grant to the poor Germans what they conceded to the conquered Hindoos, viz. to pay for the manufactured goods which they required by agricultural produce. In vain did the Germans humble themselves to the position of hewers of wood and drawers of water for the Britons. The latter treated them worse than a subject people. Nations, like individuals, if they at first only permit themselves to be ill-treated by one, soon become scorned by all, and finally become an object of derision to the very children. France, not contented with exporting to Germany enormous quantities of wine, oil, silk, and millinery, grudged the Germans their exports of cattle, grain, and flax; yes, even a small maritime province formerly possessed by Germany and inhabited by Germans, which having become wealthy and powerful by means of Germany, at all times was only able to maintain itself with and by means of Germany, barred for half a generation Germany’s greatest river by means of contemptible verbal quibbles. To fill up the measure of this contempt, the doctrine was taught from a hundred professorial chairs, that nations could only attain to wealth and power by means of universal free trade. Thus it was; but how is it now? Germany has advanced in prosperity and industry, in national self-respect and in national power, in the course of ten years as much as in a century. And how has this result been achieved? It was certainly good and beneficial that the internal tariffs were abolished which separated Germans from Germans; but the nation would have derived small comfort from that if her home industry had thenceforth remained freely exposed to foreign competition. It was especially the protection which the tariff of the Zollverein secured to manufactured articles of common use, which has wrought this miracle. Let us freely confess it, for Dr Bowring(1*) has incontrovertibly shown it, that the Zollverein tariff has not, as was before asserted, imposed merely duties for revenue — that it has not confined itself to duties of ten to fifteen per cent as Huskisson believed — let us freely admit that it has imposed protective duties of from twenty to sixty per cent as respects the manufactured articles of common use.

The National System of Political Economy (33)

Chapter 33

The Insular Supremacy and the Continental Powers — North America and France

In all ages there have been cities or countries which have been pre-eminent above all others in industry, commerce, and navigation; but a supremacy such as that which exists in our days, the world has never before witnessed. In all ages, nations and powers have striven to attain to the dominion of the world, but hitherto not one of them has erected its power on so broad a foundation. How vain do the efforts of those appear to us who have striven to found their universal dominion on military power, compared with the attempt of England to raise her entire territory into one immense manufacturing, commercial, and maritime city, and to become among the countries and kingdoms of the earth, that which a great city is in relation to its surrounding territory. to comprise within herself all industries, arts, and sciences; all great commerce and wealth; all navigation and naval power — a world’s metropolis which supplies all nations with manufactured goods, and supplies herself in exchange from every nation with those raw materials and agricultural products of a useful or acceptable kind, which each other nation is fitted by nature to yield to her — a treasure-house of all great capital — a banking establishment for all nations, which controls the circulating medium of the whole world, and by loans and the receipt of interest on them makes all the peoples of the earth her tributaries. Let us, however, do justice to this Power and to her efforts. The world has not been hindered in its progress, but immensely aided in it, by England. She has become an example and a pattern to all nations — in internal and in foreign policy, as well as in great inventions and enterprises of every kind; in perfecting industrial processes and means of transport, as well as in the discovery and bringing into cultivation uncultivated lands, especially in the acquisition of the natural riches of tropical countries, and in the civilisation of barbarous races or of such as have retrograded into barbarism. Who can tell how far behind the world might yet remain if no England had ever existed? And if she now ceased to exist, who can estimate how far the human race might retrograde? Let us then congratulate ourselves on the immense progress of that nation, and wish her prosperity for all future time. But ought we on that account also to wish that she may erect a universal dominion on the ruins of the other nationalities? Nothing but unfathomable cosmopolitanism or shopkeepers’ narrow-mindedness can give an assenting answer to that question. In our previous chapters we have pointed out the results of such denationalisation, and shown that the culture and civilisation of the human race can only be brought about by placing many nations in similar positions of civilisation, wealth, and power; that just as England herself has raised herself from a condition of barbarism to her present high position, so the same path lies open for other nations to follow: and that at this time more than one nation is qualified to strive to attain the highest degree of civilisation, wealth, and power. Let us now state summarily the maxims of State policy by means of which England has attained her present greatness. They may be briefly stated thus:

The National System of Political Economy (32)

Chapter 32

The System of Values of Exchange (Continued) — Jean Baptiste Say and his School

This author on the whole has merely endeavoured to systematise, to elucidate, and to popularise, the materials which Adam Smith had gathered together after an irregular fashion. In that he has perfectly succeeded, inasmuch as he possessed in a high degree the gift of systematisation and elucidation. Nothing new or original is to be found in his writings, save only that he asserted the productiveness of mental labours, which Adam Smith denied. Only, this view, which is quite correct according to the theory of the productive powers, stands opposed to the theory of exchangeable values, and hence Smith is clearly more consistent than Say. Mental labourers produce directly no exchangeable values; nay, more, they diminish by their consumption the total amount of material productions and savings, and hence the total of material wealth. Moreover, the ground on which Say from his point of view includes mental labourers among the productive class, viz. because they are paid with exchangeable values, is an utterly baseless one, inasmuch as those values have been already produced before they reach the hands of the mental labourers; their possessor alone is changed, but by that change their amount is not increased. We can only term mental labourers productive if we regard the productive powers of the nation, and not the mere possession of exchangeable values, as national wealth. Say found himself opposed to Smith in this respect, exactly as Smith had found himself opposed to the physiocrats.

The National System of Political Economy (31)

Chapter 31

The System of Values of Exchange (Falsely Termed by the School, The ’Industrial’ System) — Adam Smith

Adam Smith’s doctrine is, in respect to national and international conditions, merely a continuation of the physiocratic system. Like the latter, it ignores the very nature of nationalities, seeks almost entirely to exclude politics and the power of the State, presupposes the existence of a state of perpetual peace and of universal union, underrates the value of a national manufacturing power, and the means of obtaining it, and demands absolute freedom of trade.

Adam Smith fell into these fundamental errors in exactly the same way as the physiocrats had done before him, namely, by regarding absolute freedom in international trade as an axiom assent to which is demanded by common sense, and by not investigating to the bottom how far history supports this idea.

The National System of Political Economy (30)

Chapter 30

The Physiocratic or Agricultural System

Had the great enterprise of Colbert been permitted to succeed — had not the Revocation of the Edict of Nantes, the love of splendour and false ambition of Louis XIV, and the debauchery and extravagance of his successors, nipped in the bud the seeds which Colbert had sown — if consequently a wealthy manufacturing and commercial interest had arisen in France, if by good fortune the enormous properties of the French clergy had been given over to the public, if these events had resulted in the formation of a powerful lower house of Parliament, by whose influence the feudal aristocracy had been reformed — the physiocratic system would hardly have ever come to light. That system was evidently deduced from the then existing circumstances of France, and was only applicable to those circumstances.

The National System of Political Economy (29)

Chapter 29

The Industrial System (Falsely Termed by the School ’The Mercantile System’)

At the period when great nationalities arose, owing to the union of entire peoples brought about by hereditary monarchy and by the centralisation of public power, commerce and navigation, and hence wealth and naval power, existed for the most part (as we have before shown) in republics of cities, or in leagues of such republics. The more, however, that the institutions of these great nationalities became developed, the more evident became the necessity of establishing on their own territories these main sources of power and of wealth.

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Third Book

The Systems

Chapter 28

The National Economists of Italy

Italy has been the forerunner of all modern nations, in the theory as well as in the practice of Political Economy. Count Pechio has given us a laboriously written sketch of that branch of Italian literature; only his book is open to the observation, that he has clung too slavishly to the popular theory, and has not duly set forth the fundamental causes of the decline of Italy’s national industry — the absence of national unity, surrounded as she was by great nationalities united under hereditary monarchies; further, priestly rule and the downfall of municipal freedom in the Italian republics and cities. If he had more deeply investigated these causes, he could not have failed to apprehend the special tendency of the ’Prince’ of Macchiavelli, and he would not have passed that author by with merely an incidental reference to him.(1*)

The National System of Political Economy (27)

Chapter 27

The Customs System and the Popular School

The popular school does not discriminate (in respect of the operation of protective duties) between natural or primitive products and manufactured products. It perverts the fact that such duties always operate injuriously on the production of primitive or natural products, into the false conclusion that they exercise an equally detrimental influence on the production of manufactured goods.

The National System of Political Economy (26)

Chapter 26

Customs Duties as a Chief Means of Establishing and Protecting the internal Manufacturing Power

It is not part of our plan to treat of those means of promoting internal industry whose efficacy and applicability are nowhere called in question. To these belong e.g. educational establishments (especially technical schools), industrial exhibitions, offers of prizes, transport improvements, patent laws, &c.; in short, all those laws and institutions by means of which industry is furthered, and internal and external commerce facilitated and regulated. We have here merely to speak of the institution of customs duties as a means for the development of industry.

The National System of Political Economy (25)

Chapter 25

The Manufacturing Power and the Inducement to Production and Consumption

In society man is not merely productive owing to the circumstance that he directly brings forth products or creates powers of production, but he also becomes productive by creating inducements to production and to consumption, or to the formation of productive powers.

The artist by his works acts in the first place on the ennobling and refinement of the human spirit and on the productive power of society; but inasmuch as the enjoyment of art presupposes the possession of those material means whereby it must be purchased, the artist also offers inducements to material production and to thrift.