Knowledge Is Power. Charles Knight
They supplied his most pressing wants with incomparably more readiness and certainty than if he had been turned loose amongst the unappropriated productions of nature, with unlimited freedom and absolute rights. In the state in which he was actually placed his rights were limited by his duties—but this balance of rights and duties was the chief instrument in the satisfaction of his wants. Let us examine the principle a little more in detail.
An exchange was to be carried on between the owner of the coals and the man who was willing to shovel them into the owner's cellar. The labourer did not want any distinct portion of the coals, but he wanted some articles of more urgent necessity in exchange for the new value which he was ready to bestow upon the coals. The object of each exchanger was, that labour should be exchanged with capital. That object could not have been accomplished, or it would have been accomplished slowly, imperfectly, and therefore unprofitably, unless there had been interchangeable freedom and security for both exchangers—for the exchanger of capital, and the exchanger of labour. The first right of the labourer was, that his labour should be free;—the first right of the capitalist was, that his capital should be free. The rights of each were built upon the security of property. Could this security have been violated, it might have happened, either that the labourer should have been compelled to shovel in the coals—or, that the capitalist should have been compelled to employ the labourer to shovel them in. Had the lot of the unfortunate prodigal been cast in such a state of society as would have allowed this violation of the natural rights of the labourer and the capitalist, he would have found little accumulation to give a profitable direction to his labour. He would have found production suspended, or languishing. There would probably have been no heap of coals wanting his labour to give them the last value;—for the engines would have been idle that raised them from the pit, and the men would have been idle that directed the engines. The circulating capital that found wages for the men, and fuel for the engines, would have been idle, because it could not have worked with security. Accumulation, therefore, would have been suspended;—and all profitable labour would, in consequence, have been suspended. It was the unquestionable right of the labourer that his labour should be free; but it was balanced by the right of the capitalist that his accumulation should be secure. Could the labour have seized upon the capital, or the capital upon the labour, production would have been stopped altogether, or in part. The mutual freedom and security of labour and capital compel production to go forward; and labour and capital take their respective stations, and perform their respective duties, altogether with reference to the laws which govern production. These laws are founded upon the natural action of the system of exchange, carrying forward all its operations by the natural action of the great principle of demand and supply. When capital and labour know how to accommodate themselves to the direction of these natural laws, they are in a healthy state with respect to their individual rights, and the rights of industry generally. They are in that state in which each is working to the greatest profit in carrying forward the business of production.
The story of the prodigal goes on to say, "He then looked out for the next thing that might chance to offer; and went with indefatigable industry through a succession of servile employments, in different places, of longer and shorter duration." Here we see the principle of Demand and Supply still in active operation. "He looked out for the next thing that might chance to offer." He was ready with his supply of labour immediately that he saw a demand for it. Doubtless, the "indefatigable industry" with which he was ready with his supply created a demand, and thus he had in some degree a control over the demand. But in most cases the demand went before the supply, and he had thus to watch and wait upon the demand. In many instances demand and supply exercise a joint influence and control, each with regard to the other. Pliny, the Roman naturalist, relates that in the year 454 of the building of Rome (300 years before Christ) a number of barbers came over from Sicily to shave the Romans, who till that time had worn long beards. But the barbers came in consequence of being sent for by a man in authority. The demand here distinctly went before the supply; but the supply, doubtless, acted greatly upon the demand. During a time of wild financial speculation in Paris, created by what is called the Mississippi bubble, a hump-backed man went daily into the street where the stock-jobbers were accustomed to assemble, and earned money by allowing them to sign their contracts upon the natural desk with which he was encumbered. The hump-back was doubtless a shrewd fellow, and saw the difficulty under which the stock-jobbers laboured. He supplied what they appeared to want; and a demand was instantly created for his hump. He was well paid, says the story. That was because the supply was smaller than the demand. If other men with humps had been attracted by the demand, or if persons had come to the street with portable desks more convenient than the hump, the reward of his service would naturally have become less. He must have yielded to the inevitable law by which the amount of circulating capital, as compared with the number of labourers, prescribes the terms upon which capital and labour are united.
By following the direction which capital gave to his industry, the prodigal, whose course we have traced up to the point when he went into the condition of a labourer, became at length a capitalist. "He had gained, after a considerable time, money enough to purchase, in order to sell again, a few cattle, of which he had taken pains to understand the value. He speedily, but cautiously, turned his first gains into second advantages; retained, without a single deviation, his extreme parsimony; and thus advanced by degrees into larger transactions and incipient wealth. The final result was that he more than recovered his lost possessions, and died an inveterate miser, worth 60,000l."
He gained "money," and he "purchased" cattle. In the simple transaction which has been recorded of the first exchange of the prodigal's labour for capital, we find the circumstances which represent every exchange of labour for capital. The prodigal wanted meat and drink, and he gave labour in exchange for meat and drink; the capitalist wanted the produce of labour—he wanted a new value bestowed upon his coals by labour—and he gave meat and drink in exchange for the labour which the prodigal had to give. But the prodigal wanted something beyond the meat and drink which was necessary for the supply of the day. He had other immediate necessities beyond food; and he had determined to accumulate capital. He therefore required "a few pence" in addition to the "meat and drink." The capitalist held that the labour performed had conferred a value upon his property, which would be fairly exchanged for the pence in addition to the food, and he gave, therefore, in exchange, that portion of his capital which was represented by the money and by the food. This blending of one sort of consumable commodity, and of the money which represented any other consumable commodity which the money could be exchanged with, was an accident arising out of the peculiar circumstances in which the prodigal happened to be placed. In ordinary cases he would have received the money alone—that is, he would have received a larger sum of money to enable him to exchange for meat and drink, instead of receiving them in direct payment. It is clear, therefore, that as the money represented one portion of the consumable commodities which were ready to pay for the labour employed in giving a new value to the coals, it might represent another portion—the meat, for instance, without the drink; or it might represent all the consumable commodities, meat, drink, lodging, clothes, fuel, which that particular labourer might want; and even represent the accumulation which he might extract out of his self-denial as to the amount of meat, drink, lodging, clothes, and fuel which he might require as a consumer; and the farthing saved out of his money-payment might be the nest-egg which was to produce the increase out of which he purchased cattle, and died a rich miser.
We may be excused for calling attention to the fact, which is a very obvious one, that if the labourer, whose story we have told, had received a portion of the coals upon which he had conferred a new value in exchange for the labour which produced that value, he would have been paid in a way very unfavourable for production. It would have required a new labour before the coals could have procured him the meat, and drink, and lodging of which he had an instant want; and he therefore must have received a larger portion of coals to compensate for his new labour, or otherwise his labour must have been worse paid. There would have been unprofitable labour, whose loss must have fallen somewhere—either upon the capitalist or the labourer in the first instance, but upon both ultimately, because there would have been less production. All the unprofitable labour employed in bringing the exchange of the first labour for capital to maturity would have been so much power withdrawn from the efficiency of the next labour to be performed; and therefore production would have been impeded to the extent of that unprofitable