Wealth consists in the possession of objects of exchangeable value;objects of exchangeable value are produced by the labour ofindividuals in combination with the powers of nature and withcapital.By the division of labour, the productiveness of thelabour is increased; capital is accumulated by savings, byproduction exceeding consumption.The greater the total amount ofcapital, so much the greater is the division of labour, and hencethe capacity to produce.Private interest is the most effectualstimulus to labour and to economy.Therefore the highest wisdom ofstatecraft consists in placing no obstacle in the way of privateindustry, and in caring only for the good administration ofjustice.And hence also it is folly to induce the subjects of aState, by means of State legislative measures, to produce for themselves anything which they can buy cheaper from abroad.A system soconsistent as this is, which sets forth the elements of wealth,which so clearly explains the process of its production, andapparently so completely exposes the errors of the previousschools, could not fail, in default of any other, to meet withacceptance.The mistake has been simply, that this system at bottomis nothing else than a system of the private economy of all theindividual persons in a country, or of the individuals of the wholehuman race, as that economy would develop and shape itself, undera state of things in which there were no distinct nations,nationalities, or national interests -- no distinctive politicalconstitutions or degrees of civilisation -- no wars or nationalanimosities; that it is nothing more than a theory of values; amere shopkeeper's or individual merchant's theory -- not ascientific doctrine, showing how the productive powers of an entirenation can be called into existence, increased, maintained, andpreserved -- for the special benefit of its civilisation, welfare,might, continuance, and independence.
This system regards everything from the shopkeeper's point ofview.The value of anything is wealth, according to it, so its soleobject is to gain values.The establishment of powers ofproduction, it leaves to chance, to nature, or to the providence ofGod (whichever you please), only the State must have nothing at allto do with it, nor must politics venture to meddle with thebusiness of accumulating exchangeable values.It is resolved to buywherever it can find the cheapest articles -- that the homemanufactories are ruined by their importation, matters not to it.
If foreign nations give a bounty on the export of theirmanufactured goods, so much the better; it can buy them so much thecheaper.In its view no class is productive save those who actuallyproduce things valuable in exchange.It well recognises how thedivision of labour promotes the success of a business in detail,but it has no perception of the effect of the division of labour asaffecting a whole nation.It knows that only by individual economycan it increase its capital, and that only in proportion to theincrease in its capital can it extend its individual trades; but itsets no value on the increase of the productive power, whichresults from the establishment of native manufactories, or on theforeign trade and national power which arise out of that increase.
What may become of the entire nation in the future, is to it amatter of perfect indifference, so long as private individuals cangain wealth.It takes notice merely of the rent yielded by land,but pays no regard to the value of landed property; it does notperceive that the greatest part of the wealth of a nation consistsin the value of its land and its fixed property.For the influenceof foreign trade on the value and price of landed property, and forthe fluctuations and calamities thence arising; it cares not astraw.In short, this system is the strictest and most consistent'mercantile system,' and it is incomprehensible how that term couldhave been applied to the system of Colbert, the main tendency ofwhich is towards an 'industrial system' -i.e.a system which hassolely in view the founding of a national industry -- a nationalcommerce -- without regarding the temporary gains or losses ofvalues in exchange.
Notwithstanding, we would by no means deny the great merits ofAdam Smith.He was the first who successfully applied theanalytical method to political economy.By means of that method andan unusual degree of sagacity, he threw light on the most importantbranches of the science, which were previously almost whollyobscure.Before Adam Smith only a practice existed; his worksrendered it possible to constitute a science of political economy,and he has contributed a greater amount of materials for thatobject than all his predecessors or successors.
But that very peculiarity of his mind by which, in analysingthe various constituent parts of political economy, he renderedsuch important service, was the cause why he did not take acomprehensive view of the community in its entirety; that he wasunable to combine individual interests in one harmonious whole;that he would not consider the nation in preference to mereindividuals; that out of mere anxiety for the freedom of action ofthe individual producers, he lost sight of the interests of theentire nation.He who so clearly perceived the benefits of thedivision of labour in a single manufactory, did not perceive thatthe same principle is applicable with equal force to entireprovinces and nations.
With this opinion, that which Dugald Stewart says of himexactly agrees.Smith could judge individual traits of characterwith extraordinary acuteness; but if an opinion was needed as tothe entire character of a man or of a book, one could not besufficiently astonished at the narrowness and obliquity of hisviews.Nay, he was incapable of forming a correct estimate of thecharacter of those with whom he had lived for many years in themost intimate friendship.'The portrait,' says his biographer, 'wasever full of life and expression, and had a strong resemblance tothe original if one compared it with the original from a certainpoint of view; but it never gave a true and perfect representationaccording to all its dimensions and circumstances.'