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Principles of Political Economy (J.S. Mill, 1871), vol. 1

For works with similar titles, see Principles of Political Economy.
 

PRINCIPLES

 

OF

 

POLITICAL ECONOMY

 

WITH

 

SOME OF THEIR APPLICATIONS TO SOCIAL PHILOSOPHY.

 

BY

JOHN STUART MILL.

 

IN TWO VOLUMES.

VOL. I.

 

SEVENTH EDITION.

 

LONDON:

LONGMANS, GREEN, READER AND DYER.

1871.


 

LONDON:

SAVILL, EDWARDS AND CO., PRINTERS, CHANDOS STREET.

COVENT GARDEN.


 

PREFACE.

The appearance of a treatise like the present, on a subject on which so many works of merit already exist, may be thought to require some explanation.

It might, perhaps, be sufficient to say, that no existing treatise on Political Economy contains the latest improvements which have been made in the theory of the subject. Many new ideas, and new applications of ideas, have been elicited by the discussions of the last few years, especially those on Currency, on Foreign Trade, and on the important topics connected more or less intimately with Colonization: and there seems reason that the field of Political Economy should be re-surveyed in its whole extent, if only for the purpose of incorporating the results of these speculations, and bringing them into harmony with the principles previously laid down by the best thinkers on the subject.

To supply, however, these deficiencies in former treatises bearing a similar title, is not the sole, or even the principal object which the author has in view. The design of the book is different from that of any treatise on Political Economy which has been produced in England since the work of Adam Smith.

The most characteristic quality of that work, and the one in which it most differs from some others which have equalled and even surpassed it as mere expositions of the general principles of the subject, is that it invariably associates the principles with their applications. This of itself implies a much wider range of ideas and of topics, than are included in Political Economy, considered as a branch of abstract speculation. For practical purposes, Political Economy is inseparably intertwined with many other branches of social philosophy. Except on matters of mere detail, there are perhaps no practical questions, even among those which approach nearest to the character of purely economical questions, which admit of being decided on economical premises alone. And it is because Adam Smith never loses sight of this truth; because, in his applications of Political Economy, he perpetually appeals to other and often far larger considerations than pure Political Economy affords—that he gives that well-grounded feeling of command over the principles of the subject for purposes of practice, owing to which the "Wealth of Nations," alone among treatises on Political Economy, has not only been popular with general readers, but has impressed itself strongly on the minds of men of the world and of legislators.

It appears to the present writer, that a work similar in its object and general conception to that of Adam Smith, but adapted to the more extended knowledge and improved ideas of the present age, is the kind of contribution which Political Economy at present requires. The "Wealth of Nations" is in many parts obsolete, and in all, imperfect. Political Economy, properly so called, has grown up almost from infancy since the time of Adam Smith; and the philosophy of society, from which practically that eminent thinker never separated his more peculiar theme, though still in a very early stage of its progress, has advanced many steps beyond the point at which he left it. No attempt, however, has yet been made to combine his practical mode of treating his subject with the increased knowledge since acquired of its theory, or to exhibit the economical phenomena of society in the relation in which they stand to the best social ideas of the present time, as he did, with such admirable success, in reference to the philosophy of his century.

Such is the idea which the writer of the present work has kept before him. To succeed even partially in realizing it, would be a sufficiently useful achievement, to induce him to incur willingly all the chances of failure. It is requisite, however, to add, that although his object is practical, and, as far as the nature of the subject admits, popular, he has not attempted to purchase either of those advantages by the sacrifice of strict scientific reasoning. Though he desires that his treatise should be more than a mere exposition of the abstract doctrines of Political Economy, he is also desirous that such an exposition should be found in it.

 


 

The present edition, with the exception of a few verbal corrections, corresponds exactly with the last Library Edition and with the People's Edition. Since the publication of these, there has been some instructive discussion on the theory of Demand and Supply, and on the influence of Strikes and Trades Unions on wages, by which additional light has been thrown on these subjects; but the results, in the author's opinion, are not yet ripe for incorporation in a general treatise on Political Economy.[1] For an analogous reason, all notice, of the alteration made in the Land Laws of Ireland by the recent Act, is deferred until experience shall have had time to pronounce on the operation of that well-meant attempt to deal with the greatest practical evil in the economic institutions of that country.

 


 

CONTENTS

OF

THE FIRST VOLUME.

 
  1. Page
  2. ................................................................................................................................................................................................................................................................................................................................................................................................
    1
  3.  
    BOOK I.
     
    PRODUCTION.
     
    Chapter I. Of the Requisites of Production.
  4. § 1.
    Requisites of production, what
    ................................................................................................................................................................................................................................................................................................................................................................................................
    29
  5. 2.
    The function of labour defined
    ................................................................................................................................................................................................................................................................................................................................................................................................
    31
  6. 3.
    Does nature contribute more to the efficacy of labour in some occupations than in others?
    ................................................................................................................................................................................................................................................................................................................................................................................................
    33
  7. 4.
    Some natural agents limited, others practically unlimited, in quantity
    ................................................................................................................................................................................................................................................................................................................................................................................................
    34
  8.  
    Chapter II. Of Labour as an Agent of Production.
  9. § 1.
    Labour employed either directly about the thing produced, or in operations preparatory to its production
    ................................................................................................................................................................................................................................................................................................................................................................................................
    37
  10. 2.
    Labour employed in producing subsistence for subsequent labour
    ................................................................................................................................................................................................................................................................................................................................................................................................
    39
  11. 3.
    —in producing materials
    ................................................................................................................................................................................................................................................................................................................................................................................................
    42
  12. 4.
    —or implements
    ................................................................................................................................................................................................................................................................................................................................................................................................
    44
  13. 5.
    —in the protection of labour
    ................................................................................................................................................................................................................................................................................................................................................................................................
    46
  14. 6.
    —in the transport and distribution of the produce
    ................................................................................................................................................................................................................................................................................................................................................................................................
    47
  15. 7.
    Labour which relates to human beings
    ................................................................................................................................................................................................................................................................................................................................................................................................
    50
  16. 8.
    Labour of invention and discovery
    ................................................................................................................................................................................................................................................................................................................................................................................................
    51
  17. 9.
    Labour agricultural, manufacturing, and commercial
    ................................................................................................................................................................................................................................................................................................................................................................................................
    53
  18.  
    Chapter III. Of Unproductive Labour.
  19. § 1.
    Labour does not produce objects, but utilities
    ................................................................................................................................................................................................................................................................................................................................................................................................
    55
  20. 2.
    —which are of three kinds
    ................................................................................................................................................................................................................................................................................................................................................................................................
    57
  21. 3.
    Productive labour is that which produces utilities fixed and embodied in material objects
    ................................................................................................................................................................................................................................................................................................................................................................................................
    58
  22. 4.
    All other labour, however useful, is classed as unproductive
    ................................................................................................................................................................................................................................................................................................................................................................................................
    61
  23. 5.
    Productive and Unproductive Consumption
    ................................................................................................................................................................................................................................................................................................................................................................................................
    64
  24. 6.
    Labour for the supply of Productive Consumption, and labour for the supply of Unproductive Consumption
    ................................................................................................................................................................................................................................................................................................................................................................................................
    65
  25.  
    Chapter IV. Of Capital.
  26. § 1.
    Capital is wealth appropriated to reproductive employment
    ................................................................................................................................................................................................................................................................................................................................................................................................
    68
  27. 2.
    More capital devoted to production than actually employed in it
    ................................................................................................................................................................................................................................................................................................................................................................................................
    71
  28. 3.
    Examination of some cases illustrative of the idea of Capital
    ................................................................................................................................................................................................................................................................................................................................................................................................
    74
  29.  
    Chapter V. Fundamental Propositions respecting Capital.
  30. § 1.
    Industry is limited by Capital
    ................................................................................................................................................................................................................................................................................................................................................................................................
    79
  31. 2.
    —but does not always come up to that limit
    ................................................................................................................................................................................................................................................................................................................................................................................................
    81
  32. 3.
    Increase of capital gives increased employment to labour, without assignable bounds
    ................................................................................................................................................................................................................................................................................................................................................................................................
    83
  33. 4.
    Capital is the result of saving
    ................................................................................................................................................................................................................................................................................................................................................................................................
    86
  34. 5.
    All capital is consumed
    ................................................................................................................................................................................................................................................................................................................................................................................................
    88
  35. 6.
    Capital is kept up, not by preservation, but by perpetual reproduction
    ................................................................................................................................................................................................................................................................................................................................................................................................
    92
  36. 7.
    Why countries recover rapidly from a state of devastation
    ................................................................................................................................................................................................................................................................................................................................................................................................
    94
  37. 8.
    Effects of defraying government expenditure by loans
    ................................................................................................................................................................................................................................................................................................................................................................................................
    95
  38. 9.
    Demand for commodities is not demand for labour
    ................................................................................................................................................................................................................................................................................................................................................................................................
    99
  39. 10.
    Fallacy respecting Taxation
    ................................................................................................................................................................................................................................................................................................................................................................................................
    111
  40.  
    Chapter VI. Of Circulating and Fixed Capital.
  41. § 1.
    Fixed and Circulating Capital, what
    ................................................................................................................................................................................................................................................................................................................................................................................................
    114
  42. 2.
    Increase of fixed capital, when at the expense of circulating, might be detrimental to the labourers
    ................................................................................................................................................................................................................................................................................................................................................................................................
    117
  43. 3.
    —but this seldom if ever occurs
    ................................................................................................................................................................................................................................................................................................................................................................................................
    121
  44.  
    Chapter VII. On what depends the degree of Productiveness of Productive Agents.
  45. § 1.
    Land, labour, and capital, are of different productiveness at different times and places
    ................................................................................................................................................................................................................................................................................................................................................................................................
    126
  46. 2.
    Causes of superior productiveness. Natural advantages
    ................................................................................................................................................................................................................................................................................................................................................................................................
    127
  47. 3.
    —greater energy of labour
    ................................................................................................................................................................................................................................................................................................................................................................................................
    129
  48. 4.
    —superior skill and knowledge
    ................................................................................................................................................................................................................................................................................................................................................................................................
    132
  49. 5.
    —superiority of intelligence and trustworthiness in the community generally
    ................................................................................................................................................................................................................................................................................................................................................................................................
    134
  50. 6.
    —superior security
    ................................................................................................................................................................................................................................................................................................................................................................................................
    139
  51.  
    Chapter VIII. Of Co-operation, or the Combination of Labour.
  52. § 1.
    Combination of Labour a principal cause of superior productiveness
    ................................................................................................................................................................................................................................................................................................................................................................................................
    144
  53. 2.
    Effects of separation of employments analyzed
    ................................................................................................................................................................................................................................................................................................................................................................................................
    147
  54. 3.
    Combination of labour between town and country
    ................................................................................................................................................................................................................................................................................................................................................................................................
    150
  55. 4.
    The higher degrees of the division of labour
    ................................................................................................................................................................................................................................................................................................................................................................................................
    152
  56. 5.
    Analysis of its advantages
    ................................................................................................................................................................................................................................................................................................................................................................................................
    154
  57. 6.
    Limitations of the division of labour
    ................................................................................................................................................................................................................................................................................................................................................................................................
    162
  58.  
    Chapter IX. Of Production on a Large, and Production on a Small Scale.
  59. § 1.
    Advantages of the large system of production in manufactures
    ................................................................................................................................................................................................................................................................................................................................................................................................
    164
  60. 2.
    Advantages and disadvantages of the joint-stock principle
    ................................................................................................................................................................................................................................................................................................................................................................................................
    170
  61. 3.
    Conditions necessary for the large system of production
    ................................................................................................................................................................................................................................................................................................................................................................................................
    176
  62. 4.
    Large and small farming compared
    ................................................................................................................................................................................................................................................................................................................................................................................................
    179
  63.  
    Chapter X. Of the Law of the Increase of Labour.
  64. § 1.
    The law of the increase of production depends on those of three elements, Labour, Capital, and Land
    ................................................................................................................................................................................................................................................................................................................................................................................................
    194
  65. 2.
    The Law of Population
    ................................................................................................................................................................................................................................................................................................................................................................................................
    195
  66. 3.
    By what checks the increase of population is practically limited
    ................................................................................................................................................................................................................................................................................................................................................................................................
    198
  67.  
    Chapter XI. Of the Law of the Increase of Capital.
  68. § 1.
    Means and motives to saving, on what dependent
    ................................................................................................................................................................................................................................................................................................................................................................................................
    203
  69. 2.
    Causes of diversity in the effective strength of the desire of accumulation
    ................................................................................................................................................................................................................................................................................................................................................................................................
    205
  70. 3.
    Examples of deficiency in the strength of this desire
    ................................................................................................................................................................................................................................................................................................................................................................................................
    208
  71. 4.
    Exemplification of its excess
    ................................................................................................................................................................................................................................................................................................................................................................................................
    216
  72.  
    Chapter XII. Of the Law of the Increase of Production from Land.
  73. § 1.
    The limited quantity and limited productiveness of land, the real limits to production
    ................................................................................................................................................................................................................................................................................................................................................................................................
    220
  74. 2.
    The law of production from the soil, a law of diminishing return in proportion to the increased application of labour and capital
    ................................................................................................................................................................................................................................................................................................................................................................................................
    221
  75. 3.
    Antagonist principle to the law of diminishing return; the progress of improvements in production
    ................................................................................................................................................................................................................................................................................................................................................................................................
    226
  76.  
    Chapter XIII. Consequences of the foregoing Laws.
  77. § 1.
    Remedies when the limit to production is the weakness of the principle of accumulation
    ................................................................................................................................................................................................................................................................................................................................................................................................
    236
  78. 2.
    Necessity of restraining population not confined to a state of inequality of property
    ................................................................................................................................................................................................................................................................................................................................................................................................
    237
  79. 3.
    —nor superseded by free trade in food
    ................................................................................................................................................................................................................................................................................................................................................................................................
    241
  80. 4.
    —nor in general by emigration
    ................................................................................................................................................................................................................................................................................................................................................................................................
    245
  81.  
    BOOK II.
     
    DISTRIBUTION.
     
    Chapter I. Of Property.
  82. § 1.
    Introductory remarks
    ................................................................................................................................................................................................................................................................................................................................................................................................
    249
  83. 2.
    Statement of the question
    ................................................................................................................................................................................................................................................................................................................................................................................................
    251
  84. 3.
    Examination of Communism
    ................................................................................................................................................................................................................................................................................................................................................................................................
    254
  85. 4.
    —of St. Simonism and Fourierism
    ................................................................................................................................................................................................................................................................................................................................................................................................
    263
  86.  
    Chapter II. The same subject continued.
  87. § 1.
    The institution of property implies freedom of acquisition by contract
    ................................................................................................................................................................................................................................................................................................................................................................................................
    270
  88. 2.
    —the validity of prescription
    ................................................................................................................................................................................................................................................................................................................................................................................................
    272
  89. 3.
    —the power of bequest, but not the right of inheritance. Question of inheritance examined
    ................................................................................................................................................................................................................................................................................................................................................................................................
    273
  90. 4.
    Should the right of bequest be limited, and how?
    ................................................................................................................................................................................................................................................................................................................................................................................................
    279
  91. 5.
    Grounds of property in land, different from those of property in moveables
    ................................................................................................................................................................................................................................................................................................................................................................................................
    284
  92. 6.
    —only valid on certain conditions, which are not always realized. The limitations considered
    ................................................................................................................................................................................................................................................................................................................................................................................................
    285
  93. 7.
    Rights of property in abuses
    ................................................................................................................................................................................................................................................................................................................................................................................................
    291
  94.  
    Chapter III. Of the Classes among whom the Produce is distributed.
  95. § 1.
    The produce sometimes shared among three classes
    ................................................................................................................................................................................................................................................................................................................................................................................................
    293
  96. 2.
    sometimes belongs undividedly to one
    ................................................................................................................................................................................................................................................................................................................................................................................................
    294
  97. 3.
    sometimes divided between two
    ................................................................................................................................................................................................................................................................................................................................................................................................
    295
  98.  
    Chapter IV. Of Competition and Custom.
  99. § 1.
    Competition not the sole regulator of the division of the produce
    ................................................................................................................................................................................................................................................................................................................................................................................................
    298
  100. 2.
    Influence of custom on rents, and on the tenure of land
    ................................................................................................................................................................................................................................................................................................................................................................................................
    299
  101. 3.
    Influence of custom on prices
    ................................................................................................................................................................................................................................................................................................................................................................................................
    302
  102.  
    Chapter V. Of Slavery.
  103. § 1.
    Slavery considered in relation to the slaves
    ................................................................................................................................................................................................................................................................................................................................................................................................
    306
  104. 2.
    —in relation to production
    ................................................................................................................................................................................................................................................................................................................................................................................................
    308
  105. 3.
    Emancipation considered in relation to the interest of the slave-owners
    ................................................................................................................................................................................................................................................................................................................................................................................................
    310
  106.  
    Chapter VI. Of Peasant Proprietors.
  107. § 1.
    Difference between English and Continental opinions respecting peasant properties
    ................................................................................................................................................................................................................................................................................................................................................................................................
    313
  108. 2.
    Evidence respecting peasant properties in Switzerland
    ................................................................................................................................................................................................................................................................................................................................................................................................
    315
  109. 3.
    —in Norway
    ................................................................................................................................................................................................................................................................................................................................................................................................
    322
  110. 4.
    —in Germany
    ................................................................................................................................................................................................................................................................................................................................................................................................
    326
  111. 5.
    —in Belgium
    ................................................................................................................................................................................................................................................................................................................................................................................................
    332
  112. 6.
    —in the Channel Islands
    ................................................................................................................................................................................................................................................................................................................................................................................................
    338
  113. 7.
    —in France
    ................................................................................................................................................................................................................................................................................................................................................................................................
    341
  114.  
    Chapter VII. Continuation of the same subject.
  115. § 1.
    Influence of peasant properties in stimulating industry
    ................................................................................................................................................................................................................................................................................................................................................................................................
    347
  116. 2.
    —in training intelligence
    ................................................................................................................................................................................................................................................................................................................................................................................................
    350
  117. 3.
    —in promoting forethought and self-control
    ................................................................................................................................................................................................................................................................................................................................................................................................
    351
  118. 4.
    Their effect on population
    ................................................................................................................................................................................................................................................................................................................................................................................................
    353
  119. 5.
    —on the subdivision of land
    ................................................................................................................................................................................................................................................................................................................................................................................................
    364
  120.  
    Chapter VIII. Of Metayers.
  121. § 1.
    Nature of the metayer system, and its varieties
    ................................................................................................................................................................................................................................................................................................................................................................................................
    371
  122. 2.
    Its advantages and inconveniences
    ................................................................................................................................................................................................................................................................................................................................................................................................
    372
  123. 3.
    Evidence concerning its effects in different countries
    ................................................................................................................................................................................................................................................................................................................................................................................................
    375
  124. 4.
    Is its abolition desirable?
    ................................................................................................................................................................................................................................................................................................................................................................................................
    388
  125.  
    Chapter IX. Of Cottiers.
  126. § 1.
    Nature and operation of cottier tenure
    ................................................................................................................................................................................................................................................................................................................................................................................................
    391
  127. 2.
    In an overpeopled country its necessary consequence is nominal rents
    ................................................................................................................................................................................................................................................................................................................................................................................................
    394
  128. 3.
    —which are inconsistent with industry, frugality, or restraint on population
    ................................................................................................................................................................................................................................................................................................................................................................................................
    397
  129. 4.
    Ryot tenancy of India
    ................................................................................................................................................................................................................................................................................................................................................................................................
    399
  130.  
    Chapter X. Means of abolishing Cottier Tenancy.
  131. § 1.
    Irish cottiers should be converted into peasant proprietors
    ................................................................................................................................................................................................................................................................................................................................................................................................
    404
  132. 2.
    Present state of this question
    ................................................................................................................................................................................................................................................................................................................................................................................................
    412
  133.  
    Chapter XI. Of Wages.
  134. § 1.
    Wages depend on the demand and supply of labour—in other words, on population and capital
    ................................................................................................................................................................................................................................................................................................................................................................................................
    419
  135. 2.
    Examination of some popular opinions respecting wages
    ................................................................................................................................................................................................................................................................................................................................................................................................
    420
  136. § 3.
    Certain rare circumstances excepted, high wages imply restraints on population
    ................................................................................................................................................................................................................................................................................................................................................................................................
    427
  137. 4.
    —which are in some cases legal
    ................................................................................................................................................................................................................................................................................................................................................................................................
    431
  138. 5.
    —in others the effect of particular customs
    ................................................................................................................................................................................................................................................................................................................................................................................................
    434
  139. 6.
    Due restriction of population the only safeguard of a labouring class
    ................................................................................................................................................................................................................................................................................................................................................................................................
    436
  140.  
    Chapter XII. Of Popular Remedies for Low Wages.
  141. § 1.
    A legal or customary minimum of wages, with a guarantee of employment
    ................................................................................................................................................................................................................................................................................................................................................................................................
    441
  142. 2.
    —would require as a condition, legal measures for repression of population
    ................................................................................................................................................................................................................................................................................................................................................................................................
    443
  143. 3.
    Allowances in aid of wages
    ................................................................................................................................................................................................................................................................................................................................................................................................
    448
  144. 4.
    The Allotment System
    ................................................................................................................................................................................................................................................................................................................................................................................................
    450
  145.  
    Chapter XIII. Remedies for Low Wages further considered.
  146. § 1.
    Pernicious direction of public opinion on the subject of population
    ................................................................................................................................................................................................................................................................................................................................................................................................
    456
  147. 2.
    Grounds for expecting improvement
    ................................................................................................................................................................................................................................................................................................................................................................................................
    459
  148. 3.
    Twofold means of elevating the habits of the labouring people: by education
    ................................................................................................................................................................................................................................................................................................................................................................................................
    465
  149. 4.
    —and by large measures of immediate relief, through foreign and home colonization
    ................................................................................................................................................................................................................................................................................................................................................................................................
    467
  150.  
    Chapter XIV. Of the Differences of Wages in different Employments.
  151. § 1.
    Differences of wages arising from different degrees of attractiveness in different employments
    ................................................................................................................................................................................................................................................................................................................................................................................................
    471
  152. 2.
    Differences arising from natural monopolies
    ................................................................................................................................................................................................................................................................................................................................................................................................
    477
  153. 3.
    Effect on wages of a class of subsidized competitors
    ................................................................................................................................................................................................................................................................................................................................................................................................
    482
  154. 4.
    —of the competition of persons with independent means of support
    ................................................................................................................................................................................................................................................................................................................................................................................................
    485
  155. 5.
    Wages of women, why lower than those of men
    ................................................................................................................................................................................................................................................................................................................................................................................................
    490
  156. 6.
    Differences of wages arising from restrictive laws, and from combinations
    ................................................................................................................................................................................................................................................................................................................................................................................................
    491
  157. 7.
    Cases in which wages are fixed by custom
    ................................................................................................................................................................................................................................................................................................................................................................................................
    493
  158.  
    Chapter XV. Of Profits.
  159. § 1.
    Profits resolvable into three parts; interest, insurance, and wages of superintendence
    ................................................................................................................................................................................................................................................................................................................................................................................................
    495
  160. 2.
    The minimum of profits; and the variations to which it is liable
    ................................................................................................................................................................................................................................................................................................................................................................................................
    498
  161. 3.
    Differences of profits arising from the nature of the particular employment
    ................................................................................................................................................................................................................................................................................................................................................................................................
    500
  162. 4.
    General tendency of profits to an equality
    ................................................................................................................................................................................................................................................................................................................................................................................................
    502
  163. 5.
    Profits do not depend on prices, nor on purchase and sale
    ................................................................................................................................................................................................................................................................................................................................................................................................
    508
  164. 6.
    The advances of the capitalist consist ultimately in wages of labour
    ................................................................................................................................................................................................................................................................................................................................................................................................
    510
  165. 7.
    The rate of profit depends on the Cost of Labour
    ................................................................................................................................................................................................................................................................................................................................................................................................
    512
  166.  
    Chapter XVI. Of Rent.
  167. § 1.
    Rent the effect of a natural monopoly
    ................................................................................................................................................................................................................................................................................................................................................................................................
    516
  168. 2.
    No land can pay rent except land of such quality or situation, as exists in less quantity than the demand
    ................................................................................................................................................................................................................................................................................................................................................................................................
    517
  169. 3.
    The rent of land consists of the excess of its return above the return to the worst land in cultivation
    ................................................................................................................................................................................................................................................................................................................................................................................................
    519
  170. 4.
    —or to the capital employed in the least advantageous circumstances
    ................................................................................................................................................................................................................................................................................................................................................................................................
    522
  171. 5.
    Is payment for capital sunk in the soil, rent, or profit?
    ................................................................................................................................................................................................................................................................................................................................................................................................
    525
  172. 6.
    Rent does not enter into the cost of production of agricultural produce
    ................................................................................................................................................................................................................................................................................................................................................................................................
    530
  173.  
    BOOK III.
     
    EXCHANGE.
     
    Chapter I. Of Value.
  174. § 1.
    Preliminary remarks
    ................................................................................................................................................................................................................................................................................................................................................................................................
    535
  175. 2.
    Definitions of Value in Use, Exchange Value, and Price
    ................................................................................................................................................................................................................................................................................................................................................................................................
    537
  176. 3.
    What is meant by general purchasing power
    ................................................................................................................................................................................................................................................................................................................................................................................................
    538
  177. 4.
    Value a relative term. A general rise or fall of values a contradiction
    ................................................................................................................................................................................................................................................................................................................................................................................................
    540
  178. 5.
    The laws of Value, how modified in their application to retail transactions
    ................................................................................................................................................................................................................................................................................................................................................................................................
    541
  179.  
    Chapter II. Of Demand and Supply, in their relation to Value.
  180. § 1.
    Two conditions of Value: Utility, and Difficulty of Attainment
    ................................................................................................................................................................................................................................................................................................................................................................................................
    544
  181. 2.
    Three kinds of Difficulty of Attainment
    ................................................................................................................................................................................................................................................................................................................................................................................................
    546
  182. 3.
    Commodities which are absolutely limited in quantity
    ................................................................................................................................................................................................................................................................................................................................................................................................
    548
  183. 4.
    Law of their value, the Equation of Demand and Supply
    ................................................................................................................................................................................................................................................................................................................................................................................................
    550
  184. 5.
    Miscellaneous cases falling under this law
    ................................................................................................................................................................................................................................................................................................................................................................................................
    552
  185.  
    Chapter III. Of Cost of Production, in its relation to Value.
  186. § 1.
    Commodities which are susceptible of indefinite multiplication without increase of cost. Law of their Value, Cost of Production
    ................................................................................................................................................................................................................................................................................................................................................................................................
    555
  187. 2.
    —operating through potential, but not actual, alterations of supply
    ................................................................................................................................................................................................................................................................................................................................................................................................
    557
  188.  
    Chapter IV. Ultimate Analysis of Cost of Production.
  189. § 1.
    Principal element in Cost of Production Quantity of Labour
    ................................................................................................................................................................................................................................................................................................................................................................................................
    562
  190. 2.
    Wages not an element in Cost of Production
    ................................................................................................................................................................................................................................................................................................................................................................................................
    564
  191. 3.
    —except in so far as they vary from employment to employment
    ................................................................................................................................................................................................................................................................................................................................................................................................
    566
  192. 4.
    Profits an element in Cost of Production, in so far as they vary from employment to employment
    ................................................................................................................................................................................................................................................................................................................................................................................................
    568
  193. 5.
    —or are spread over unequal lengths of time
    ................................................................................................................................................................................................................................................................................................................................................................................................
    569
  194. 6.
    Occasional elements in Cost of Production: taxes, and scarcity value of materials
    ................................................................................................................................................................................................................................................................................................................................................................................................
    574
  195.  
    Chapter V. Of Rent, in its relation to Value.
  196. § 1.
    Commodities which are susceptible of indefinite ultiplication, but not without increase of cost. Law of their Value, Cost of Production in the most unfavourable existing circumstances
    ................................................................................................................................................................................................................................................................................................................................................................................................
    577
  197. 2.
    Such commodities, when produced in circumstances more favourable, yield a rent equal to the difference of cost
    ................................................................................................................................................................................................................................................................................................................................................................................................
    580
  198. 3.
    Rent of mines and fisheries, and ground-rent of buildings
    ................................................................................................................................................................................................................................................................................................................................................................................................
    583
  199. 4.
    Cases of extra profit analogous to rent
    ................................................................................................................................................................................................................................................................................................................................................................................................
    586
  200.  
    Chapter VI. Summary of the Theory of Value.
  201. § 1.
    The theory of Value recapitulated in a series of propositions
    ................................................................................................................................................................................................................................................................................................................................................................................................
    588
  202. 2.
    How modified by the case of labourers cultivating for subsistence
    ................................................................................................................................................................................................................................................................................................................................................................................................
    591
  203. 3.
    —by the case of slave labour
    ................................................................................................................................................................................................................................................................................................................................................................................................
    593
  1.  
    APPENDIX.
     
  2. Substance of three articles in the Morning Chronicle of 11th, 13th, and 16th January, 1847, in reply to MM. Mourner and Rubichon and to the Quarterly Review, on the Subdivision of Landed Property in France
    ................................................................................................................................................................................................................................................................................................................................................................................................
    597


  1. The present state of the discussion my be learnt from a review (by the author) of Mr. Thornton's work "On Labour," in the "Fortnightly Review" of May and June, 1869, and from Mr. Thornton's reply to that review in the second edition of his very instructive book.