would be of vastly greater value than that of himself, in the same manner, his own subsist the foregoing. But there is no country in which the whole annual produce is employed in maintaining the industrious. The idle everywhere consume a great part of it; and, according to the different proportions in which it is annually divided between those two different orders of people, its ordinary or average value must either annually increase or diminish, or continue the same from one year to another. Note 8. ence, which is generally suitable to the profit which he may reasonably expect from the sale of his goods. Unless they yield him this profit, therefore, they do not repay him what they may very properly be said to have really cost him. CHAP. VII. OF THE NATURAL AND MARKET PRICE OF COM- Though the price, therefore, which leaves him this profit, is not always the lowest at which a dealer may sometimes sell his goods, it is the lowest at which he is likely to sell them for any considerable time; at least where there is perfect liberty, or where he may change his trade as often as he pleases. The actual price at which any commodity is commonly sold, is called its market price. It may either be above, or below, or exactly the same with its natural price. The market price of every particular commodity is regulated by the proportion between the quantity which is actually brought to THERE is in every society or neighbourhood market, and the demand of those who are an ordinary or average rate, both of wages willing to pay the natural price of the comand profit, in every different employment of modity, or the whole value of the rent, labour, labour and stock. This rate is naturally re- and profit, which must be paid in order to gulated, as I shall shew hereafter, partly by bring it thither. Such people may be called the general circumstances of the society, their the effectual demanders, and their demand the riches or poverty, their advancing, stationary, effectual demand; since it may be sufficient or declining condition, and partly by the par- to effectuate the bringing of the commodity ticular nature of each employment. to market. It is different from the absolute There is likewise in every society or neigh-demand. A very poor man may be said, in bourhood an ordinary or average rate of rent, some sense, to have a demand for a coach and which is regulated, too, as I shall shew here- six; he might like to have it; but his deafter, partly by the general circumstances of mand is not an effectual demand, as the comthe society or neighbourhood in which the modity can never be brought to market in land is situated, and partly by the natural or order to satisfy it. improved fertility of the land. When the quantity of any commodity which These ordinary or average rates may be is brought to market falls short of the effec called the natural rates of wages, profit and tual demand, all those who are willing to pay rent, at the time and place in which they the whole value of the rent, wages, and profit, commonly prevail. which must be paid in order to bring it thithWhen the price of any commodity is neither, cannot be supplied with the quantity which er more nor less than what is sufficient to pay they want. Rather than want it altogether, the rent of the land, the wages of the labour, some of them will be willing to give more. A and the profits of the stock employed in rais- competition will immediately begin among ing, preparing, and bringing it to market, ac- them, and the market price will rise more or cording to their natural rates, the commodity less above the natural price, according as is then sold for what may be called its natu- either the greatness of the deficiency, or the ral price. wealth and wanton luxury of the competitors, The commodity is then sold precisely for happen to animate more or less the eagerness what it is worth, or for what it really costs of the competition. Among competitors of the person who brings it to market; for equal wealth and luxury, the same deficiency though, in common language, what is called will generally occasion a more or less eager the prime cost of any commodity does not competition, according as the acquisition of comprehend the profit of the person who is to the commodity happens to be of more or less sell it again, yet, if he sells it at a price which importance to them. Hence the exorbitant does not allow him the ordinary rate of profit price of the necessaries of life during the in his neighbourhood, he is evidently a loser blockade of a town, or in a famine. by the trade; since, by employing his stock When the quantity brought to market exin some other way, he might have made that ceeds the effectual demand, it cannot be all profit. His profit, besides, is his revenue, sold to those who are willing to pay the whole the proper fund of his subsistence. As, value of the rent, wages, and profit, which while he is preparing and bringing the goods must be paid in order to bring it thither. to market, he advances to his workmen their Some part must be sold to those who are wages, or their subsistence; so he advances to willing to pay less, and the low price which than in that of old iron. they give for it must reduce the price of the ferent accidents may sometimes keep them whole. The market price will sink more or suspended a good deal above it, and some less below the natural price, according as the times force them down even somewhat below greatness of the excess increases more or less it. But whatever may be the obstacles which the competition of the sellers, or according as hinder them from settling in this centre of reit happens to be more or less important to pose and continuance, they are constantly them to get immediately rid of the commo- tending towards it. dity. The same excess in the importation of The whole quantity of industry annually perishable, will occasion a much greater com-employed in order to bring any commodity to petition than in that of durable commodities; market, naturally suits itself in this manner to in the importation of oranges, for example, the effectual demand. It naturally aims at bringing always that precise quantity thither When the quantity brought to market is which may be sufficient to supply, and n just sufficient to supply the effectual demand, more than supply, that demand. and no more, the market price naturally But, in some employments, the same quancomes to be either exactly, or as nearly as tity of industry will, in different years, procan be judged of, the same with the natural duce very different quantities of commodities; price. The whole quantity upon hand can while, in others, it will produce always the be disposed of for this price, and cannot be same, or very nearly the same. The same disposed of for more. The competition of number of labourers in husbandry will, in the different dealers obliges them all to ac- different years, produce very different quancept of this price, but does not oblige them tities of corn, wine, oil, hops, &c. But the to accept of less. same number of spinners or weavers will every The quantity of every commodity brought year produce the same, or very nearly the to market naturally suits itself to the effectual same, quantity of linen and woollen cloth. It demand. It is the interest of all those who is only the average produce of the one species employ their land, labour, or stock, in bring-of industry which can be suited, in any reing any commodity to market, that the quan- spect, to the effectual demand; and as its actity never should exceed the effectual demand; and it is the interest of all other people that it never should fall short of that demand. If at any time it exceeds the effectual demand, some of the component parts of its price must be paid below their natural rate. If it is rent, the interest of the landlords will immediately prompt them to withdraw a part of their land; and if it is wages or profit, the interest of the labourers in the one case, and of their employers in the other, will prompt them to withdraw a part of their labour or stock, from this employment. The quantity brought to market will soon be no more than sufficient to supply the effectual demand. All the different parts of its price will rise to their natural rate, and the whole price to its natural price. tual produce is frequently much greater, and frequently much less, than its average produce, the quantity of the commodities brought to market will sometimes exceed a good deal, and sometimes fall short a good deal, of the effectual demand. Even though that demand, therefore, should continue always the same, their market price will be liable to great fluctuations, will sometimes fall a good deal below, and sometimes rise a good deal above, their natural price. In the other species of industry, the produce of equal quantities of labour being always the same, or very nearly the same, it can be more exactly suited to the effectual demand. While that demand continues the same, therefore, the market price of the commodities is likely to do so too, and to be either altogether, or as nearly as can be If, on the contrary, the quantity brought to judged of, the same with the natural price. market should at any time fall short of the ef- That the price of linen and woollen cloth is fectual demand, some of the component parts liable neither to such frequent, nor to such of its price must rise above their natural rate. great variations, as the price of corn, every If it is rent, the interest of all other landlords man's experience will inform him. The price will naturally prompt them to prepare more of the one species of commodities varies only land for the raising of this commodity; if it with the variations in the demand; that of is wages or profit, the interest of all other la- the other varies not only with the variations bourers and dealers will soon prompt them to in the demand, but with the much greater, employ more labour and stock in preparing and more frequent, variations in the quantity and bringing it to market. The quantity of what is brought to market, in order to supbrought thither will soon be sufficient to supply that demand. ply the effectual demand. All the different The occasional and temporary fluctuations parts of its price will soon sink to their na-in the market price of any commodity fall tural rate, and the whole price to its natural chiefly upon those parts of its price which re price. solve themselves into wages and profit. That The natural price, therefore, is, as it were, part which resolves itself into rent is less afthe central price, to which the prices of all fected by them. A rent certain in money is commodities are continually gravitating. Dif-not in the least affected by them, either in its rate or in its value. A rent which consists any new rivals. Secrets of this kind, how. either in a certain proportion, or in a certain ever, it must be acknowledged, can seldom quantity, of the rude produce, is no doubt af- be long kept; and the extraordinary profit fected in its yearly value by all the occasional can last very little longer than they are kept. and temporary fluctuations in the market Secrets in manufactures are capable of be Such enhancements of the market price are evidently the effects of particular accidents, of which, however, the operation may sometimes last for many years together. price of that rude produce; but it is seldom ing longer kept than secrets in trade. A dyer affected by them in its yearly rate. In sett- who has found the means of producing a parling the terms of the lease, the landlord and ticular colour with materials which cost only farmer endeavour, according to their best half the price of those commonly made use of, judgment, to adjust that rate, not to the tem- may, with good management, enjoy the adporary and occasional, but to the average and vantage of his discovery as long as he lives, ordinary price of the produce. and even leave it as a legacy to his posterity. Such fluctuations affect both the value and His extraordinary gains arise from the high the rate, either of wages or of profit, accord-price which is paid for his private labour. ing as the market happens to be either over- They properly consist in the high wages of stocked or understocked with commodities or that labour. But as they are repeated upon with labour, with work done, or with work to every part of his stock, and as their whole be done. A public mourning raises the price amount bears, upon that account, a regular of black cloth (with which the market is al- proportion to it, they are commonly considermost always understocked upon such occa ed as extraordinary profits of stock. sions), and augments the profits of the merchants who possess any considerable quantity of it. It has no effect upon the wages of the weavers. The market is understocked with commodities, not with labour, with work done, Some natural productions require such a not with work to be done. It raises the singularity of soil and situation, that all the wages of journeymen tailors. The market is land in a great country, which is fit for prohere understocked with labour. There is an ducing them, may not be sufficient to supply effectual demand for more labour, for more the effectual demand. The whole quantity work to be done, than can be had. It sinks brought to market, therefore, may be disposed the price of coloured silks and cloths, and of to those who are willing to give more than thereby reduces the profits of the merchants what is sufficient to pay the rent of the land who have any considerable quantity of them which produced them, together with the wages upon hand. It sinks, too, the wages of the of the labour and the profits of the stock which workmen employed in preparing such com- were employed in preparing and bringing them modities, for which all demand is stopped for to market, according to their natural rates. six months, perhaps for a twelvemonth. The Such commodities may continue for whole market is here overstocked both with commo- centuries together to be sold at this high price; dities and with labour. and that part of it which resolves itself into But though the market price of every par- the rent of land, is in this case the part which ticular commodity is in this manner continu- is generally paid above its natural rate. The ally gravitating, if one may say so, towards rent of the land which affords such singular the natural price; yet sometimes particular and esteemed productions, like the rent of accidents, sometimes natural causes, and some-some vineyards in France of a peculiarly hap times particular regulations of police, may, in py soil and situation, bears no regular promany commodities, keep up the market price, portion to the rent of other equally fertile and for a long time together, a good deal above equally well cultivated land in its neighbourthe natural price. hood. The wages of the labour, and the proWhen, by an increase in the effectual de-fits of the stock employed in bringing such inand, the market price of some particular commodities to market, on the contrary, are commodity happens to rise a good deal above seldom out of their natural proportion to those the natural price, those who employ their of the other employments of labour and stock stocks in supplying that market, are generally in their neighbourhood. careful to conceal this change. If it was Such enhancements of the market price are commonly known, their great profit would evidently the effect of natural causes, which tempt so many new rivals to employ their may hinder the effectual demand from ever stocks in the same way, that, the effectual de- being fully supplied, and which may continue, mand being fully supplied, the market price therefore, to operate for ever. would soon be reduced to the natural price, A monopoly granted either to an individual and, perhaps, for some time even below or to a trading company, has the same effect it. If the market is at a great distance as a secret in trade or manufactures. The from the residence of those who supply it, monopolists, by keepin the market constantly they may sometimes be able to keep the se- understocked by never fully supplying the ef cret for several years together, and may so fectual demand, sell their commodities much long enjoy their extraordinary profits without above the natural price, and raise their emo 1 luments, whether they consist in wages or pro- | afterwards educated to the trade will naturally The price of monopoly is upon every occa- This is all that I think necessary to be ob served at present concerning the deviations, whether occasional or permanent, of the mar The exclusive privileges of corporations, ket price of commodities from the natural statutes of apprenticeship, and all those laws price. which restrain in particular employments, the The natural price itself varies with the nacompetition to a smaller number than might tural rate of each of its component parts, of otherwise go into them, have the same ten-wages, profit, and rent; and in every society dency, though in a less degree. They are a this rate varies according to their circumstan sort of enlarged monopolies, and may fre- ces, according to their riches or poverty, their quently, for ages together, and in whole classes advancing, stationary, or declining condition. of employments, keep up the market price of I shall, in the four following chapters, endeav particular commodities above the natural price, our to explain, as fully and distinctly as I can. and maintain both the wages of the labour and the causes of those different variations. the profits of the stock employed about them somewhat above their natural rate. Such enhancements of the market price may last as long as the regulations of police which give occasion to them. The market price of any particular commodity, though it may continue long above, can seldom continue long below, its natural price. Whatever part of it was paid below the natural rate, the persons whose interest it affected would immediately feel the loss, and would immediately withdraw either so much land or so much labour, or so much stock, from being employed about it, that the quantity brought to market would soon be no more than sufficient to supply the effectual demand. Its market price, therefore, would soon rise to the natural price; this at least would be the case where there was perfect liberty. First, I shall endeavour to explain what are the circumstances which naturally determine the rate of wages, and in what manner those circumstances are affected by the riches or poverty, by the advancing, stationary, or declining state of the society. Secondly, I shall endeavour to shew what are the circumstances which naturally deter mine the rate of profit; and in what manner, too, those circumstances are affected by the like variations in the state of the society. Though pecuniary wages and profit are very different in the different employments of la bour and stock; yet a certain proportion seems commonly to take place between both the pecuniary wages in all the different employments of labour, and the pecuniary profits in all the different employments of stock. This pro portion, it will appear hereafter, depends partThe same statutes of apprenticeship and ly upon the nature of the different employ other corporation laws, indeed, which, when a ments, and partly upon the different laws and manufacture is in prosperity, enable the work-policy of the society in which they are carried man to raise his wages a good deal above their on. But though in many respects dependent natural rate, sometimes oblige him, when it upon the laws and policy, this proportion decays, to let them down a good deal below seems to be little affected by the riches or poit. As in the one case they exclude many verty of that society, by its advancing, sta people from his employment, so in the other tionary, or declining condition, but to remain they exclude him from many employments. the same, or very nearly the same, in all those The effect of such regulations, however, is not different states. I shall, in the third place, near so durable in sinking the workman's endeavour to explain all the different circumwages below, as in raising them above their stances which regulate this proportion. natural rate. Their operation in the one way In the fourth and last place, I shall endeav may endure for many centuries, but in the our to shew what are the circumstances which other it can last no longer than the lives of regulate the rent of land, and which either some of the workmen who were bred to the raise or lower the real price of all the different business in the time of its prosperity. When substances which it produces. Note 9. they are gone, the number of those who are CHAP. VIII. OF THE WAGES OF LABOUR. | the landlord demands a share of almost all the produce which the labourer can either raise or collect from it. His rent makes the first deduction from the produce of the labour which is employed upon land. It seldom happens that the person who tills THE produce of labour constitutes the natural the ground has wherewithal to maintain himrecompence or wages of labour. self till he reaps the harvest. His mainte stock of a master, the farmer who employs him, and who would have no interest to employ him, unless he was to share in the produce of his labour, or unless his stock was to be replaced to him with a profit. This profit makes a second deduction from the produce of the labour which is employed upon land, In that original state of things which pre-nance is generally advanced to him from the cedes both the appropriation of land and the accumulation of stock, the whole produce of labour belongs to the labourer. He has neither landlord nor master to share with him. Had this state continued, the wages of labour would have augmented with all those improvements in its productive powers, to which the division of labour gives occasion. The produce of almost all other labour is All things would gradually have become liable to the like deduction of profit. In all cheaper. They would have been produced by arts and manufactures, the greater part of the a smaller quantity of labour; and as the com-workmen stand in need of a master, to admodities produced by equal quantities of la- vance them the materials of their work, and bour would naturally in this state of things be their wages and maintenance, till it be comexchanged for one another, they would have pleted. He shares in the produce of their labeen purchased likewise with the produce of bour, or in the value which it adds to the masmaller quantity. terials upon which it is bestowed; and in this share consists his profit. But though all things would have become cheaper in reality, in appearance many things It sometimes happens, indeed, that a single might have become dearer, than before, or independent workman has stock sufficient both have been exchanged for a greater quantity of to purchase the materials of his work, and to other goods. Let us suppose, for example, maintain himself till it be completed. He is that in the greater part of employments the both master and workman, and enjoys the productive powers of labour had been im- whole produce of his own labour, or the whole proved to tenfold, or that a day's labour could value which it adds to the materials upon which produce ten times the quantity of work which it is bestowed. It includes what are usually it had done originally; but that in a particu- two distinct revenues, belonging to two dislar employment they had been improved only tinct persons, the profits of stock, and the to double, or that a day's labour could pro- wages of labour. duce only twice the quantity of work which Such cases, however, are not very frequent; it had done before. In exchanging the pro- and in every part of Europe twenty workinen luce of a day's labour in the greater part of serve under a master for one that is indepenEmployments for that of a day's labour in this dent, and the wages of labour are everywhere particular one, ten times the original quantity understood to be, what they usually are, when of work in them would purchase only twice the labourer is one person, and the owner of the original quantity in it. Any particular the stock which employs him another. quantity in it, therefore, a pound weight, for example, would appear to be five times dearer than before. In reality, however, it would be twice as cheap. Though it required five times the quantity of other goods to purchase it, it men desire to get as much, the masters to give would require only half the quantity of la- as little, as possible. The former are disposed bour either to purchase or to produce it. The to combine in order to raise, the latter in oracquisition, therefore, would be twice as easy der to lower, the wages of labour. as before. What are the common wages of labour, depends everywhere upon the contract usually made between those two parties, whose interests are by no means the same. The work It is not, however, difficult to foresee which But this original state of things, in which of the two parties must, upon all ordinary octhe labourer enjoyed the whole produce of his casions, have the advantage in the dispute, own labour, could not last beyond the first in- and force the other into a compliance with troduction of the appropriation of land and their terms. The masters, being fewer in numthe accumulation of stock. It was at an end, ber, can combine much more easily: and the therefore, long before the most considerable law, besides, authorises, or at least does no improvements were made in the productive prohibit, their combinations, while it prohibits powers of labour; and it would be to no pur- those of the workmen. We have no acts of pose to trace further what might have been parliament against combining to lower the its effects upon the recompence or wages of price of work, but many against combining labour. to raise it. In all such disputes, the masters As soon as land becomes private property. can hold out much longer. A landlord, a |