Freeland: A Social Anticipation | Page 5

discover the sources of wealth, but because to them there was nothing enigmatical about those sources of wealth. The nations became richer the more progress they made in the art of producing; and this was so self-evident and clear that, very rightly, no one thought it necessary to waste words about it. It was not until the end of the sixteenth and the beginning of the seventeenth centuries of our era, therefore scarcely three hundred years ago, that political economy as a distinct science arose.
It is impossible for the unprejudiced eye to escape seeing what the first political economists sought for--what the problem was with which they busied themselves. They stood face to face with the enigmatical fact that increasing capacity of production is not necessarily accompanied or followed by an increase of wealth; and they sought to explain this fact. Why this remarkable fact then first made its appearance will be clearly seen from what follows; it is unquestionable that it then appeared, for the whole system of these first political economists, the so-called Mercantilists, had no other aim than to demonstrate that the increase of wealth depends not, as everybody had until then very naturally believed, upon increasing productiveness of labour, but upon something else, that something else being, in the opinion of the Mercantilists, money. Notwithstanding what may be called the tangible absurdity of this doctrine, it remained unquestioned for generations; nay, to be candid, most men still cling to it--a fact which would be inconceivable did not the doctrine offer a very simple and plausible explanation of the enigmatical phenomenon that increasing capacity of production does not necessarily bring with it a corresponding increase of wealth.
But it is equally impossible for the inquiring human mind to remain permanently blind to the fact that money and wealth are two very different things, and that therefore some other solution must be looked for of the problem, the existence of which is not to be denied. The Physiocrats found this second explanation in the assertion that the soil was the source and origin of all wealth, whilst human labour, however highly developed it might be, could add nothing to what was drawn from the soil, because labour itself consumed what it produced. This may look like the first application of the subsequently discovered natural law of the conservation of force; and--notwithstanding its obvious absurdity--it was seriously believed in because it professed to explain what seemed otherwise inexplicable. Between the labourer's means of subsistence, the amount of labour employed, and the product, there is by no means that quantitative relation which is to be found in the conversion of one physical force into another. Human labour produces more or less in proportion as it is better or worse applied; for production does not consist in converting labour into things that have a value, but in using labour to produce such things out of natural objects. A child can understand this, yet the acutest thinkers of the eighteenth century denied it with the approval of the best of their contemporaries and of not the worst of their epigones, because they could not otherwise explain the strange problem of human economics.
Then arose that giant of our science, one of the greatest minds of which humanity can boast--Adam Smith. He restored the ancient wisdom of our ancestors, and also clearly and irrefutably demonstrated what they had only instinctively recognised--namely, that the increase of wealth depends upon the productiveness of human labour. But while he threw round this truth the enduring ramparts of his logic and of his sound understanding, he altogether failed to see that the actual facts directly contradicted his doctrine. He saw that wealth did not increase step by step with the increased productiveness of labour; but he believed he had discovered the cause of this in the mercantilistic and physiocratic sins of the past. In his day the historical sense was not sufficiently developed to save him from the error of confounding the--erroneous--explanations of an existing evil with its causes. Hence he believed that the course of economic events would necessarily correspond fully with the restored laws of a sound understanding--that is, that wealth would necessarily increase step by step with the capacity of producing it, if only production were freed from the legislative restraints and fiscal fetters which cramped it.
But even this delusion could not long prevail. Ricardo was the first of the moderns who perceived that wealth did not increase in proportion to industrial capacity, even when production and trade were, as Smith demanded, freed from State interference and injury. He hit upon the expedient of finding the cause of this incongruity in the nature of labour itself. Since labour is the only source of value, he said, it cannot increase value. A thing is worth as much