(4.i.12) This net produce is the fund, from which all addition to the national capital iscommonly made. If the net produce is all consumed unproductively, the national capital remains unaltered.
It is neither diminished nor increased. If more than the net produce is consumed unproductively,it is taken from the capital; and so far the capital of the nation is reduced. If less than the netproduce is unproductively consumed, the surplus is devoted to productive consumption; and thenational capital is increased.
(4.i.13) Though a very accurate conception may thus be formed of the two species ofconsumption; and the two species of labour; productive, and unproductive; it is not easy to drawthe line precisely between them. Almost all our classifications are liable to this inconvenience.
Between things, which differ the most widely, there are almost always orders of things, whichapproach by insensible gradations. We divide animals into two classes, the rational andirrational: and no two ideas can be more clearly distinguished. Yet beings may be found, ofwhich it would be difficult to say, to which of the two classes they belonged. In like manner,there are consumers, and labourers, who may seem, with some propriety, to be capable of beingranked, either in the productive, or the unproductive class. Notwithstanding this difficulty, it isabsolutely necessary, for the purposes of human discourse, that classification should beperformed, and the line drawn somewhere. This may be done, with sufficient accuracy both forscience and. for practice. It is chiefly necessary that the more important properties of the objectsclassified should be distinctly marked in the definition of the class. It is not difficult, after this,to make allowance, in practice, for those things which he, as it were, upon the confines of twoclasses; and partake, in some degree, of the properties of both.
Section II. That Which Is Annually Produced Is AnnuallyConsumed (4.ii.1) From what we have now ascertained of the nature of production and consumption, itwill easily be seen, that the whole of what is annually produced is annually consumed; or, that whatis produced in one year, is consumed in the next.
(4.ii.2) Every thing, which is produced, belongs to somebody, and is destined by the ownersto some use. There are however, but two sorts of use: that for immediate enjoyment, and that forultimate profit. To use for ultimate profit, is to consume productively. To use for immediateenjoyment, is to consume unproductively.
(4.ii.3) We have just observed, that what is used for ultimate profit, is laid out, asexpeditiously as possible, in wages of labour, machinery, and raw material. This is a fact of primaryimportance; and many errors of those who reason loosely in Political Economy, arise from theneglect of it. Whatever is saved from the annual produce, in order to be converted into capital, isnecessarily consumed; because to make it answer the purpose of capital, it must be employed inthe payment of wages, in the purchase of raw material to be worked into a finished commodity,or, lastly, in the making of machines, effected in like manner by the payment of wages, and theworking up of raw materials. With respect to that part of the annual produce, which is destinedfor unproductive consumption, there is less frequently any mistake. As it would be attended witha loss to lay in a greater stock of articles of this class than is required, for immediate use, all ofthem, except a few, of which the quality is improved by their age, are always expeditiouslyconsumed, or put in a course of consumption.
(4.ii.4) A year is assumed, in political economy, as the period which includes a revolvingcircle of production and consumption. No period does so exactly. Some articles are produced andconsumed in a period much less than a year. In others, the circle is greater than a year. It isnecessary, for the ends of discourse, that some period should be assumed as including this circle.
The period of a year is the most convenient. It corresponds with one great class of productions,those derived from the cultivation of the ground. And it is easy, when we have obtained forms ofexpression, which correspond accurately to this assumtion, to modify them in practice to thecase of those commodities, the circle of whose production and consumption is either greater orless than the standard to which our general propositions are conformed.
Section III. That Consumption Is Co-Extensive WithProduction (4.iii.1) It requires only a few explanations to show, that this is a direct corollary from theproposition established in the preceding section.
(4.iii.2) A man produces, only because he wishes to possess. If the commodity, which heproduces, is the commodity which he desires to possess, he stops when he has produced as muchas he desires; and his supply is exactly proportioned to his demand. The savage, who makes hisown bow and arrows, does not make bows and arrows beyond what he wishes to possess.
(4.iii.3) When a man produces a greater quantity of any commodity than he desires forhimself, it can only be on one account; namely, that he desires some other commodity which he canobtain in exchange for the surplus of what he himself has produced. It seems hardly necessary tooffer any thing in support of so necessary a proposition; it would be inconsistent with the knownlaws of human nature to suppose, that a man would take the trouble to produce any thing withoutdesiring to have any thing. If he desires one thing, and produces another, it is only because thething which he desires can be obtained by means of the thing which he produces, and betterobtained, than if he had endeavoured to produce it himself.
