This chapter deals with the accumulation of capital. The second half of the chapter isn’t especially interesting to me, as it concerns itself with the way an individual might spend his capital (luxeries or production, and the kind of luxeries) and the effect this has on the capital of the nation. Today, the issue is much more the degree of concentration of wealth in a few hands, and much less whether those with wealth spend it on feasts or expensive trinkets.
The first half of the chapter is more interesting in terms of the economic laws. On page 270 he writes: “There is one sort of labor which adds to the value of the subject upon which it is bestowed: there is another which has no such effect.” In the first category he includes farmers and manufacturers; in the second servants. Later, he implies this also includes opera-singers, opera-dancers, lawyers, churchmen, &c.
Further down on 270 he speaks of labor invested in machinery as labor stocked up and stored against later use. This is profound, and helps to understand why machinery cannot, itself, increase the value of a commoodity, but only transfer it. “That subject, or what is the same thing, the price of that subject, can afterwards, if necessary, put into motion a quantity of labor equal to that which had originally produced it.” This is well known in physics, and seems to also apply to economics: machines can store, transfer, or alter the form of energy (or work, or labor), but cannot create it. Where we depart from physics is that machinery can multiply the effect of labor by increasing its efficiency, but this is still qualitatively different from creating it.
Speaking again of lawyers, clergymen, prostitutes, and similar laborours: “Like the declamation of the actor, the harrangue of the orator, or the tune of the musician, the work of all of them perishes in the very instant of production.” This has changed because of the improvement in technology to preserve information: now, a singer is able to add value to a commodity: a CD or DVD. But even if the case has changed, his method is spot on. (Sidenote: One might consider that pornographic film and video has changed some forms of prostitution from unproductive to productive labor; I wonder what Smith would say?)
Page 273: “The proportion, therefore, between the productive and unproductive hands, depends very much in every country upon the proportion between that part of the annual produce which, as soon as it becomes either from the ground or from the hands of the productive laborers, is destined for constituting a revenue, either as rent, or as profit. This proportion is very different in rich from what it is in poor countries.”
This is very important in a couple of ways. First, the difference between rich and poor countries consists in several things, but most importantly on the cultural level–by which I mean, specifically, the technological level: how productive is labor in that country? To what extent can labor be multiplied? The other interesting thing that came to mind is that it struck me, when he spoke of rent and profit, that is often treating those two things in the same way. It is not so big a leap after all from Smith’s saying that ground-rent is a division of value (along with wages and profit) to saying that ground-rent and profit are among the ways that suprlus value is divided.
Page 281: “The value of consumable goods annually circulated within the society being greater, will require a greater quantity of money to circulate them.”
Page 283: “Such people, as they themselves producing nothing, are all maintained by the produce of other men’s labor.” He is not speaking here of capitalists, but, notwithstandind their useful (and, in a market economy, necessary) role in production, he could be.
Page 284: “The productive powers of the same number of laborers cannot be increased, but in consequence either of some addition and improvement to those machiens and instruments which facilitate and abridge labor; or of a more proper division and distribution of employment. In either case, addtional capital is almost always required. It is by means of an additional capital only, that the undertaker of any work can either provide his workmen with better machinery, or make a more proper distribution of employment among them.” Very nice! That is, indeed, how a market economy works. That’s why it is called capitalism.