small utility, since nothing is easier than to replace it. Again, in saying that a diamond, which is of great value, is of very little use, we pass a moral judgment, undoubtedly well-founded, but very ill-understood. The diamond possesses the utility of satisfying a want still very keenly felt among men, the cravings, namely, of vanity. In this case both the want and the utility are false, but neither will disappear until reason and justice have made great progress. Thus, even in the case of water and diamonds, wherever there is value there is also utility.

§ 2. Value in Use, and Value in Exchange. Every commodity," says Aristotle (Politics, I. ix.), may be used in two ways, first to help to satisfy the want to answer which it has been created, and, secondly, to serve for exchange. Boots are of service in walking, but they may also, by means of exchange, serve to procure other objects, such as money, food, or any other product."

According to Adam Smith, the utility of a thing in so far as it serves the need which gave it birth, is its value in use; its utility, in so far as it serves to procure other objects, is its value in exchange. Value in use will depend on the services which an object can be made to render, such as, in the case of boots, the length of time they can be worn.

Value in exchange will depend on the quantity of the articles which I desire to exchange already on the market, and also on the quantity on the market

of the articles I desire to receive and which can be offered in exchange. If there is a large supply of boots and but little money, the value of boots will be less than if there were few of these and an abundance of money.

CHAPTER V.

THE METHOD OF INVESTIGATION.

STUART MILL says that political economy is essentially an abstract science, and its method the à priori method; and he maintains that it is constructed on hypotheses completely analogous to those which, under the name of definitions, form the basis of the other abstract sciences.

J. B. Say, on the other hand, remarks: "Political economy has only become a science by becoming a science of observation." Say is right; but not in the sense in which the majority quote him. The economist ought to employ the method of observation in quite a different way from the student of nature or physics. The latter observe facts as nature presents them, and do not dream of changing them. When their task is at an end, that of the economist

commences.

The economist observes the motives which rouse

men to action. Then he seeks the conditions in which men must be placed in order that, influenced by these motives, they may attain to comfort by their labour.

Like all animate beings, man seeks to support himself and to reproduce his species; so much the naturalist observes. But what are the ideas and the laws which will induce him to increase the stock of food rather than to multiply his species? This is the inquiry for the economist. To solve the problem he must study the facts presented by history, geography, and statistics. He marks under the empire of what ideas and what laws societies have been prosperous, and why they have been prosperous; and under the empire of what ideas and what laws they have been wretched, and why they have been wretched. Man being a reasonable creature, a free agent and capable of improvement, the economist advises him to use this reason and freedom so as to adopt the former and reject the latter.

The true method, then, is this: to observe facts, not merely with a view to stating them as the naturalist does, but to deduce from them what laws and what ideas must be adopted in order that men may attain to comfort and subsequently to perfection.

CHAPTER VI.

DIVISION OF POLITICAL ECONOMY.

I NEED bread to feed me. I have to produce it as economically as possible-this is the production of wealth.

A companion has helped me to sow the corn, another to grind it, a third to make the flour into bread. Each ought to have his share in the produce, and we make the division as fairly as possible-this is the distribution of wealth.

When every one has his share he ought to use it as rationally as possible-this is the consumption of wealth.

To determine the social laws which enable wealth to be produced most economically, to be distributed most equitably, and to be consumed most rationally,. we must study separately each of the three acts which make up the work of economy.

Accordingly, we must divide the matters with which our science has to deal into three parts :—

1. The production of wealth.

2. The distribution and circulation of wealth. 3. The consumption of wealth.

BOOK II.

THE FACTORS OF PRODUCTION AND
PRODUCTIVE LABOUR.

CHAPTER I.

THE PRODUCTION OF WEALTH.

§ 1. Definition of Production.

MAN has many and constantly recurring wants. Guided by the impulse of the desires to which these give rise, he takes certain natural objects and either consumes them directly or fashions them in such a manner as to fit them to satisfy his wants. In a word, he produces.

Man cannot create an atom of matter, but he draws minerals and combustibles from the earth, provisions, textiles, and commodities of all kinds from the cultivated soil, and by fashioning and transporting all these things renders them useful. Production, then, is the creation of utilities.

Those who render services to their fellow-men-the magistrate who enforces respect for the law, the policeman who protects us, the doctor who cures,