Like all the later writers on the subject of Political Economy, Bentham acknowledged Adam Smith as his master; and he professed only to analyze some of those departments which the founder of the science had not examined, or in relation to which he had adopted views inconsistent with the great principles of his own system.
The chief service which Bentham has done to this science, has been in the application of his exhaustive system to the carrying out, to their full extent, the doctrines of Free Trade. As in every other subject, he applied to this the criterion of the Greatest-happiness principle, and its bearing on legislation. Political Economy, if it were to be looked upon as an art, he conceived to be the art of supplying mankind at large with the greatest possible quantity of the produce of industry, and of distributing it in the manner most conducive to the wellbeing of humanity. When he asked what legislation ought to do towards the accomplishment of these ends, the answer was — Let it leave each man to do what seems best to himself. The wealth of individuals is the wealth of the community; and each man is the best architect of his own fortunes. The preservation of security is all that Political Economy looks to from the legislature — security for wealth created — security for the exercise of ingenuity and industry in creating more — security for enforcing the performance of contracts.*
This, its essential and simple duty, the legislature was found to be neglecting, while it was occupied in making abortive attempts to perform the unperformable task of increasing productiveness or decreasing consumption. It denied to the creditor, what it might so easily have given him — facilities for immediate access to the funds of the dishonest or obstinate debtor. The debtor might be deprived of his liberty on the oath of any ruffian, and his creditor might make him a slave for life; but there was no middle course where justice could meet humanity — where the unfortunate might be spared the punishment due only to a felon, and the fraudulent might be deprived of the means of defying the law. This state of matters has been much improved in the course of modern Legislation. It cannot be denied that these improvements are in a great measure owing to the writings of Bentham,† and they are respectively additions to that security which, in his opinion, was all that Political Economy demanded of the Law.
Though it cannot, however, frame laws for directly increasing or preserving the wealth of the community, legislation may do much to enable the individual members to do these things rightly for themselves. Its chief means of accomplishing this is Education. On the effect of intelligence in increasing individual, and thence national production, it is quite unnecessary to enlarge. It gives the engineer the means of inventing, and properly applying machinery. It gives the merchant the means of knowing the most profitable markets. It gives the labourer the means of knowing where his labour is most valued, and enables him, when he finds the trade he is occupied in, falling, or becoming overstocked, to turn his hand to another. In short, in all circumstances, skill, the fruit of education, gives the producer the means of increasing the value of his produce to his own benefit, and to that of the community. (See above, p. 71.)
Rewards, for exhibitions of skill or genius in arts and manufactures, are aids to the operation of education: they serve to create emulation, and to open and improve the faculties. On the most judicious means of adapting these rewards to their ends, he wrote a considerable quantity of remarks and elucidations. He thought the most ingeniously devised source of reward, was that of giving a monopoly, in the use of an invention, to the inventor, for some limited time — the Patent system. The great value of this arrangement he found to be in its power of adjusting the amount of the reward to the extent to which society found itself benefited. He did not adopt the view, that the produce of intellectual labour, or of skill, should be declared by the law to be like the physical subjects of appropriation, something which must be for ever the property of him who brought it into existence, or of those deriving right from him. If such a principle had been opened up at the time when he wrote, he would probably have found, on a comparison of the end proposed to be accomplished, with the means of performing it, that human legislation could not accomplish so difficult a task as that of keeping all subjects of invention, and all productions of intellect, the perpetual property of some person or other, as it does in the case of physical objects — even had such a result been desirable. Accordingly, the foundation on which the Patent and Copyright laws are placed, is that of Privilege, granted as a reward for services. The impediments thrown in the way of the acquisition of the reward, by the costly and cumbrous machinery of the Patent laws, is much deplored. Bentham’s suggestions as to a simpler system of Patent laws, have been taken advantage of in a series of statutes, which have been remodelled and consolidated by the 5 & 6 Vic. c. 100. This act adopts a practical facility for its operation, which was likewise suggested by Bentham — viz. a register of the inventions or patterns as to which the privilege is held, with a series of marks for separating and individualizing them.*
Bentham found one important element, in relation to which Adam Smith had lost hold of the pure principles of free trade. The father of political economy had not succeeded in so completely clearing the nature of money of its adventitious and popular acceptations, as to be able to treat it like an ordinary commodity, subject to the common rules of trade. Hence he supported the Usury laws, which are essentially a restriction of free trade in money. As an exposition of this fallacy, Bentham wrote his “Defence of Usury.”† It has often been remarked that this title is not a descriptive one — the work is no more a defence of usury than it is a defence of high prices. It merely proves the folly and mischievousness of any attempt to fix the price that should be paid for the use of money. It will be unnecessary to make any analysis of arguments which have now been seconded by the almost entire abolition of the Usury laws.
Bentham’s other works on Political Economy are chiefly occupied in the exposure of the fallacy of those artificial efforts which legislation makes to increase the country’s wealth. One of the most prominent and extravagant of these he found to be colonies.‡ The expense which they occasion, not only in the way of continuous support, but as the cause of wars, is enormous. They give nothing to the mother country; for they will never consent to be taxed. A trade with them is not more advantageous than a trade with any other people; — they will not give more than the market price for our goods, or sell their own to us at less. They can make no addition to our trade; for it is limited by our capital — by that amount of the proceeds of industry which we have saved up from consumption. If we can double our capital, we may double our trade; but we can never increase it by wasting our capital in compelling people to buy from us. We may give our colonies the monopoly of a certain trade with the mother country — this is just going to a narrow, and consequently disadvantageous market, instead of a wide, and consequently good one. We may compel them to consume our manufactures — we must first contrive to give them the money to buy them with; and thus we hire purchasers, to keep up a trade which cannot support itself.
Colonization is, however, not without its advantages, though few of these fall to the share of the mother country. It may be the means of removing the damaged part of a population, through a system of emigration. It is only, however, in peculiar circumstances that it will not be a very extravagant means of accomplishing this end. If there is another country which will absorb our damaged* population, the support of colonies for the purpose, is just paying for what may be got for nothing. Colonization may be the means of spreading the blessings of civilisation among savage tribes: here there is a palpable advantage to those tribes themselves, and to the world at large; but it is obtained at a sacrifice on the part of the mother country. It will sometimes occur, that the possession of fortified places abroad is serviceable for the protection of the free commerce of a nation; but this is a benefit of rare occurrence, and is very often supposed to be obtained when it is not.
The science of Political Economy has made so much progress, especially in the department of free trade, since the date of Bentham’s writings on the subject, that it will hardly be of service to analyze his arguments against Monopolies, Prohibitions, Restrictions, and Bounties.† Perhaps no other writer on Political Economy has given so clear an account of the incidence of bounties on exportation. He describes them as tribute paid to the foreign consumer. If we can produce the article cheaper than other nations can, the foreigner buys from us of course. If we reduce it below its proper remunerating price, he is not the less ready to buy from us — but the only way in which we can so reduce it, is by paying part of the price for him.
In the case of bounties upon exportation, the error is not so palpable as in that of bounties upon production, but the evil is greater. In both cases, the money is equally lost: the difference is in the persons who receive it. What you pay for production, is received by your countrymen — what you pay for exportation, you bestow upon strangers. It is an ingenious scheme for inducing a foreign nation to receive tribute from you without being aware of it; a little like that of the Irishman who passed his light guinea, by cleverly slipping it between two halfpence. . . .
The Irishman who passed his light guinea was very cunning; but there have been French and English more cunning than he, who have taken care not to be imposed upon by his trick. When a cunning individual perceives you have gained some point with him, his imagination mechanically begins to endeavour to get the advantage of you, without examining whether he would not do better were he to leave you alone. Do you appear to believe that the matter in question is advantageous to you? He is convinced by this circumstance that it is proportionally disadvantageous to him, and that the safest line of conduct for him to adopt, is to be guided by your judgment. Well acquainted with this disposition of the human mind, an Englishman laid a wager, and placed himself upon the Pontneuf, the most public thoroughfare in Paris, offering to the passengers a crown of six francs for a piece of twelve sous. During half a day he only sold two or three.
Since individuals in general are such dupes to their self-mistrust, is it strange that governments, having to manage interests which they so little understand, and of which they are so jealous, should have fallen into the same errors? A government, believing itself clever, has given a bounty upon the exportation of an article, in order to force the sale of it among a foreign nation: what does this other nation in consequence? Alarmed at the sight of this danger, it takes all possible methods for its prevention. When it has ventured to prohibit the article, everything is done. It has refused the six-franc pieces for twelve sous. When it has not dared to prohibit it, it has balanced this bounty by a counter-bounty upon some article that it exports. Not daring to refuse the crown of six francs for twelve sous, it has cleverly slipped some little diamond between the two pieces of money — and thus the cheat is cheated. — Vol. iii. p. 62-63.
The reader who takes an interest in financial projects will find much to engage his attention in the plan for converting stock into Annuity notes.* The project is an improvement on the Exchequer Bill system. It invites Government to come into the field in opposition to the private banks, with the advantage in its favour of allowing interest on its paper securities. The notes are to be of various amounts. They are to carry interest daily from the day of issue, and are each to have a table by which its value in interest added to capital may be ascertained on any given day. The Author was of opinion that these notes would be used as cash, as of their value on each day according to the table.
* See Works, vol. ii. p. 1-103. See also vol. i. p. 302; ii. 269; ix. 11.
† See Works, vol. i. p. 546; iii. 428; v. 533; vi. 135, 176, 180; vii. 381.
* See Works, vol. ii. p. 212; iii. 71; v. 373; vi. 584.
† Commencement of vol. iii. of the Works.
‡ See Works, vol. ii. p. 547 et seq.; iii. 52 et seq.; iv. 408 et seq.
* The term “surplus population” is generally employed in relation to emigration; but this implies an application of the system too wide to be practicable. Population never can be too great when there is employment for all; and no nation could afford to carry off the numbers annually added to a population which, by such removals, has free room to grow. All who can be removed by any practicable system are immediately replaced; and, before any advantage can be had by the removal, it must be shown that, by some improvement in the institutions and habits of the country, the unproductive individuals removed are to be replaced by productive. The committee of the House of Commons, of 1841, on emigration from the Highlands, with great caution, recommended that no money for the purpose should be advanced by Government until there was some security, in an amendment of the Scottish Poor Law, that a similar unproductive population should not succeed to those so removed.
† Probably the only subject in relation to which Bentham is behind the knowledge of the present age, (his works on Political Economy were almost all written in the 18th century,) is in his views of the incidence of machinery on the wages of labour. Taking the direct advantages of machinery on the one side — cheapness of production, and the command of foreign markets arising out of that cheapness — he deducted from these the loss to labour, (vol. iii. pp. 39, 67-68.) He had forgotten to keep in view, that of the capital exhausted on hand-made, and that on machine-made produce, it is not a necessary fact that a less proportion of the latter should go in the form of wages of labour than of the former. In the case, for instance, of a certain capital spent on the production of stockings, if they are hand-knit, the wages go to the knitter; while, if they be machine-made, the wages go to the miner, the smelter, the machine-maker, &c. The elements of the prices of commodities are, rent of land, on which the raw material is produced — wages of labour — and profits of stock. These elements will vary in their proportions, according to incidental circumstances; but it does not follow that they will be necessarily different in the case of hand-produce, from what they are in the case of machine-produce. Another discovery of modern science in this department, which seems not to have been anticipated by Bentham, is, the fallacy as to the influence of the Sinking Fund, so clearly exposed by Dr. Robert Hamilton in his work on the National Debt.
* Works, vol. iii. p. 105 et seq.
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