these commodities better than he can, he will grow wheat or something else for which they have a demand, in the hope of trading with them. His produce will then depend for its direction on their demand. All other capitalists are influenced by the same motives. They know that their stock, however ample, will not last long; they therefore labour to replace it; if they can, they get others to help them, and, as an inducement, let these others share their present stock. All trade is founded on this simple principle.
Mill, like Ricardo before him, has got confused by giving to the word capital, which means the ownership of wealth, the definition which should be given only to wealth. He uses the word sometimes in the usual—sometimes in the defined sense.
The velvet-maker has a capital which he employs in making velvet; here "capital" means wealth. He gives his wealth to the weavers who help him to make the velvet, and thus to renew his stock of wealth. Again, the velvet-buyer has a capital which he devotes to buying the velvet. Here "capital" means not wealth, but the ownership of wealth; a right to a share of the wealth produced in the world, which share is taken in the form of velvet. The velvet-maker does not want velvet for himself; like the farmer, he produces things he does not want, so as, by trade, to get the things he does want. His own demand for commodities has made him work, and his neighbours' demand for velvet has given the direction to his work.
There has been only one portion of wealth employed in making the velvet, that of the velvet-maker. The wealth of the velvet-buyer has been employed about something else. He also has been making something he did not want, so that he could get what he did want, which was velvet. Mill's arguments are founded on the erroneous supposition that there were two portions of wealth employed about it.
If the velvet-buyer put his money into the bank, as supposed in my illustration, it would have been unnecessary for the velvet-maker to have any capital at all; he could have borrowed it from the bank, and thus the velvet-buyer would have supplied almost directly the commodities which maintained the velvet-weavers while they were at work.
It will thus appear that Mill's fourth theorem is erroneous, and the corollaries he draws from it equally so. If a capitalist spends his wealth in employing retainers of any kind, he does no more good to the working classes than if he spent it by exchanging it for velvet or diamonds.
His own demand for commodities is the only cause that his own stock of wealth is employed in feeding and clothing labourers while they are engaged in producing new wealth. If he does not himself produce the very commodities he wants, it is merely because it is more convenient to
