Private Economy and National Economy
We have proved historically that the unity of the nation formsthe fundamental condition of lasting national prosperity; and wehave shown that only where the interest of individuals has beensubordinated to those of the nation, and where successivegenerations have striven for one and the same object, the nationshave been brought to harmonious development of their productivepowers, and how little private industry can prosper without theunited efforts both of the individuals who are living at the time,and of successive generations directed to one common object.Wehave further tried to prove in the last chapter how the law ofunion of powers exhibits its beneficial operation in the individualmanufactory, and how it acts with equal power on the industry ofwhole nations.In the present chapter we have now to demonstratehow the popular school has concealed its misunderstanding of thenational interests and of the effects of national union of powers,by confounding the principles of private economy with those ofnational economy.
'What is prudence in the conduct of every private family,' saysAdam Smith,(1*) 'can scarce be folly in that of a great kingdom.'
Every individual in pursuing his own interests necessarily promotesthereby also the interests of the community.It is evident thatevery individual, inasmuch as he knows his own local circumstancesbest and pays most attention to his occupation, is far better ableto judge than the statesman or legislator how his capital can mostprofitably be invested.He who would venture to give advice to thepeople how to invest their capital would not merely take uponhimself a useless task, but would also assume to himself anauthority which belongs solely to the producer, and which can beentrusted to those persons least of all who consider themselvesequal to so difficult a task.Adam Smith concludes from this:
'Restrictions on trade imposed on the behalf of the internalindustry of a country, are mere folly; every nation, like everyindividual, ought to buy articles where they can be procured thecheapest; in order to attain to the highest degree of nationalprosperity, we have simply to follow the maxim of letting thingsalone (laisser faire et laisser aller).' Smith and Say compare anation which seeks to promote its industry by protective duties, toa tailor who wants to make his own boots, and to a bootmaker whowould impose a toll on those who enter his door, in order topromote his prosperity.As in all errors of the popular school, soalso in this one does Thomas Cooper go to extremes in his book(2*)which is directed against the American system of protection.
'Political economy,' he alleges, 'is almost synonymous with theprivate economy of all individuals; politics are no essentialingredient of political economy; it is folly to suppose that thecommunity is something quite different from the individuals of whomit is composed.Every individual knows best how to invest hislabour and his capital.The wealth of the community is nothing elsethan the aggregate of the wealth of all its individual members; andif every individual can provide best for himself, that nation mustbe the richest in which every individual is most left to himself.'
The adherents of the American system of protection had opposedthemselves to this argument, which had formerly been adduced byimporting merchants in favour of free trade; the Americannavigation laws had greatly increased the carrying trade, theforeign commerce, and fisheries of the United States; and for themere protection of their mercantile marine millions had beenannually expended on their fleet; according to his theory thoselaws and this expense also would be as reprehensible as protectiveduties.' In any case,' exclaims Mr Cooper, 'no commerce by sea isworth a naval war; the merchants may be left to protectthemselves.'
Thus the popular school, which had begun by ignoring theprinciples of nationality and national interests, finally comes tothe point of altogether denying their existence, and of leavingindividuals to defend them as they may solely by their ownindividual powers.
How? Is the wisdom of private economy, also wisdom in nationaleconomy? Is it in the nature of individuals to take intoconsideration the wants of future centuries, as those concern thenature of the nation and the State? Let us consider only the firstbeginning of an American town; every individual left to himselfwould care merely for his own wants, or at the most for those ofhis nearest successors, whereas all individuals united in onecommunity provide for the convenience and the wants of the mostdistant generations; they subject the present generation for thisobject to privations and sacrifices which no reasonable personcould expect from individuals.Can the individual further take intoconsideration in promoting his private economy, the defence of thecountry, public security and the thousand other objects which canonly be attained by the aid of the whole community? Does not theState require individuals to limit their private liberty accordingto what these objects require? Does it not even require that theyshould sacrifice for these some part of their earnings, of theirmental and bodily labour, nay, even their own life? We must firstroot out, as Cooper does, the very ideas of 'State' and 'nation'
before this opinion can be entertained.