1. What is Political Economy? Political Economy treats of the wealth of nations; it inquires into the causes which make one nation more rich and prosperous than another. It aims at teaching what should be done in order that poor people may be as few as possible, and that everybody may, as a general rule, be well paid for his work. Other sciences, no doubt, assist us in reaching the same end. The science of mechanics shows how to obtain force, and how to use it in working machines. Chemistry teaches how useful substances may be produced—how beautiful dyes and odours and oils, for instance, may be extracted from the disagreeable refuse of the gasworks. Astronomy is necessary for the navigation of the oceans. Geology guides in the search for coal and metals.

Various social sciences, also, are needed to promote the welfare of mankind. Jurisprudence treats of the legal rights of persons, and how they may be best defined and secured by just laws. Political Philosophy inquires into the different forms of government and their relative advantages. Sanitary Science ascertains the causes of disease. The science of Statistics collects all manner of facts relating to the state or community. All these sciences are useful in showing how we may be made more healthy, wealthy, and wise.

But Political Economy is distinct from all these other sciences, and treats of wealth itself; it inquires what wealth is; how we can best consume it when we have got it; and how we may take advantage of the other sciences to get it. People are fond of finding fault with political economy, because it treats only of wealth; they say that there are many better things than wealth, such as virtue, affection, generosity. They would have us study these good qualities rather than mere wealth. A man may grow rich by making hard bargains, and saving up his money like a miser. Now as this is not nearly so good as if he were to spend his wealth for the benefit of his relatives, friends, and the public generally, they proceed to condemn the science of wealth.

But these complainers misunderstand the purpose of a science like political economy. They do not see that in learning we must do one thing at a time. We cannot learn the social sciences all at the same time. No one objects to astronomy that it treats only of the stars, or to mathematics that it treats only of numbers and quantities. It would be a very curious Science Primer which should treat of astronomy, geology, chemistry, physics, physiology, &c., all at once. There must be many physical sciences, and there must be also many social sciences, and each of these sciences must treat of its own proper subject, and not of things in general.

2. Mistakes about Political Economy. A great many mistakes are made about the science we are going to consider by people who ought to know better. These mistakes often arise from people thinking that they understand all about political economy without studying it. No ordinary person of sense ventures to contradict a chemist about chemistry, or an astronomer about eclipses, or even a geologist about rocks and fossils. But everybody has his opinion one way or another about bad trade, or the effect of high wages, or the harm of being underbid by cheap labour, or any one of hundreds of questions of social importance. It does not occur to such people that these matters are really more difficult to understand than chemistry, or astronomy, or geology, and that a lifetime of study is not sufficient to enable us to speak confidently about them. Yet, they who have never studied political economy at all, are usually the most confident.

The fact is that, just as physical science was formerly hated, so now there is a kind of ignorant dislike and impatience of political economy. People wish to follow their own impulses and prejudices, and are vexed when told that they are doing just what will have the opposite effect to that which they intend. Take the case of so-called charity. There are many good-hearted people who think that it is virtuous to give alms to poor people who ask for them, without considering the effect produced upon the people. They see the pleasure of the beggar on getting the alms, but they do not see the after effects, namely, that beggars become more numerous than before. Much of the poverty and crime which now exist have been caused by mistaken charity in past times, which has caused a large part of the population to grow up careless, and improvident, and idle. Political economy proves that, instead of giving casual ill-considered alms, we should educate people, teach them to work and earn their own livings, and save up something to live upon in old age. If they continue idle and improvident, they must suffer the results of it. But as this seems hard-hearted treatment, political economists are condemned by soft-hearted and mistaken people. The science is said to be a dismal, cold-blooded one, and it is implied that the object of the science is to make the rich richer, and to leave the poor to perish. All this is quite mistaken.

The political economist, when he inquires how people may most easily acquire riches, does not teach that the rich man should keep his wealth like a miser, nor spend it in luxurious living like a spendthrift. There is absolutely nothing in the science to dissuade the rich man from spending his wealth generously and yet wisely. He may prudently help his relatives and friends; he may establish useful public institutions, such as free public libraries, museums, public parks, dispensaries, &c.; he may assist in educating the poor, or promoting institutions for higher education; he may relieve any who are suffering from misfortunes which could not have been provided against; cripples, blind people, and all who are absolutely disabled from helping themselves, are proper objects of the rich man's charity. All that the political economist insists upon is that charity shall be really charity, and shall not injure those whom it is intended to aid. It is sad to think that hitherto much harm has been done by those who wished only to do good.

It is sad, again, to see thousands of persons trying to improve their positions by means which have just the opposite effect, I mean by strikes, by refusing to use machinery, and by trying, in various ways, to resist the production of wealth. Working men have made a political economy of their own: they want to make themselves rich by taking care not to produce too much riches. They, again, see an immediate effect of what they do, but they do not see what happens as the after result. It is the same with the question of Free Trade. In England we have at length learned the wisdom of leaving commerce free. In other countries, and even in the Australian Colonies, laws are yet passed to make people richer by preventing them from using the abundant products of other lands. People actually refuse to see that wealth must be increased by producing it where it can be produced most easily and plentifully. Each trade, each town, each nation must furnish what it can yield most cheaply, and other goods must be bought from the places where they also can be raised most easily.

Political economy teaches us to look beyond the immediate effect of what we do, and to seek the good of the whole community, and even of the whole of mankind. The present prosperity of England is greatly due to the science which Adam Smith gave to the world in his "Wealth of Nations." He taught us the value of Free Labour and Free Trade, and now, a hundred years after the publication of his great book, there ought not to be so many mistaken people vainly acting in opposition to his lessons. It is certain that if people do not understand a true political economy, they will make a false one of their own. Hence the imperative need that no one, neither man nor woman, should grow up without acquiring some comprehension of the science which we are going to study.

3. Divisions of the Science. I will begin by stating the order in which the several branches or divisions of the science of economy are to be considered in this little treatise. Firstly, we must learn what wealth, the subject of the science, consists of. Secondly, we proceed to inquire how wealth is used or consumed; nothing, we shall see, can be wealth, unless it be put to some use, and before we make wealth we must know what we want to use. Thirdly, we can go on to consider how wealth is produced or brought into existence; and how, in the fourth place, having been produced, it is shared among the different classes of people who have had a hand in producing it. Briefly, we may say that political economy treats of (1) The Nature, (2) The Consumption, (3) The Production, and (4) The Distribution of Wealth. It will also be necessary to say a little about Taxation. A part of the wealth of every country must be taken by the government, in order to pay the expenses of defending and governing the nation. But taxation may come, perhaps, under the head of distribution.

4. Wealth and Natural Riches. We do not learn anything by reading that political economy is the science of wealth, unless we know what science is, and what wealth is. When one term is defined by means of other terms, we must understand these other terms, in order to get any light upon the subject. In the Primer of Logic I have already attempted to explain what science is, and I will now attempt to make plain what wealth is.

Doubtless many people think that there is no difficulty in knowing what wealth is; the real difficulty is to get it. But in this they are mistaken. There are a great many people in this country who have made themselves rich, and few or none of them would be able to explain clearly what wealth is. In fact it is not at all easy to decide the question. The popular idea is that wealth consists of money, and money consists of gold and silver; the wealthy man, then, would be one who has an iron safe full of bags of gold and silver money. But this is far from being the case; rich men, as a general rule, have very little money in their possession. Instead of bags of money they keep good balances at their bankers. But this again does not tell us what wealth is, because it is difficult to say what a bank balance consists of; the balance is shown by a few figures in the bankers' books. As a general rule the banker has not got in his possession the money which he owes to his customers.

Perhaps some one will say that he is beyond question rich, who owns a great deal of land. But this depends entirely upon where and what the land is. A man who owns an English county is very wealthy; a man might own an equal extent of land in Australia, without being remarkably rich. The savages of Australia, who held the land before the English took it, had enormous quantities of land, but they were nevertheless miserably poor. Thus it is plain that land alone is not wealth.

It may be urged that, in order to form wealth, the land should be fertile, the soil should be good, the rivers and lakes abounding in fish, and the forests full of good timber. Under the ground there should be plenty of coal, iron, copper, reefs of gold, &c. If, in addition to these, there is a good climate, plenty of sunlight, and enough, but not too much, water, then the country is certainly rich. It is true that these things have been called natural riches; but I mention them in order to point out that they are not in themselves wealth. People may live upon land full of natural riches, as the North American Indians lived upon the country which now forms the United States; nevertheless they may be very poor, because they cannot, or they will not labour, in such a way as to turn the natural riches into wealth. On the other hand, people like the Dutch live upon very poor bits of land, and yet become wealthy by skill, industry and providence. The fact is that wealth is more due to labour and ingenuity than to a good soil or climate; but all these things are needed in order that people shall become as rich as the inhabitants of England, France, the United States, or Australia.

5. What is Wealth? Nassau Senior, one of the best writers on political economy, defined wealth in these words: Under that term we comprehend all those things, and those things only, which are transferable, are limited in supply, and are directly or indirectly productive of pleasure, or preventive of pain. It is necessary to understand, in the first place, exactly what Senior meant. According to him, whatever is comprehended under wealth must have three distinct qualities, and whatever has these three qualities must be a part of wealth. If these qualities are rightly chosen, we get a correct definition, which, as explained in the Logic Primer (section 44), is a precise statement of the qualities which are just sufficient to make out a class, and to tell us what things belong to it and what do not. Instead, however, of the long phrase "directly or indirectly productive of pleasure or preventive of pain," we may substitute the single word useful, and we may then state the definition in this simple way:—

We still need to learn exactly what is meant by the three qualities of wealth; we must learn what it is to be transferable, limited in supply, and useful.

6. Wealth is transferable. By being transferable, we mean that a thing can be passed over (Latin, trans, across, and fero, I carry) from one person to another. Sometimes things can be literally handed over, like a watch or a book; sometimes they can be transferred by a written deed, or by legal possession, as in the case of land and houses; services, also, can be transferred, as when a footman hires himself to a master. Even a musician or a preacher transfers his services, when his auditors have the benefit of hearing him. But there are many desirable things which cannot be transferred from one person to another; a rich man can hire a footman, but he cannot buy the footman's good health; he can hire the services of the best physician, but if these services fail to restore health, there is no help. So, too, it is impossible really to buy or sell the love of relatives, the esteem of friends, the happiness of a good conscience. Wealth may do a great deal, but it cannot really ensure those things which are more precious than pearls and rubies. Political economy does not pretend to examine all the causes of happiness, and those moral riches which cannot be bought and sold are no part of wealth in our present use of the word. The poor man who has a good conscience, affectionate friends, and good health, may really be much happier than the rich man, who is deprived of such blessings; but, on the other hand, a man need not lose his good conscience, and his other sources of happiness when he becomes rich and enjoys all the interesting occupations and amusements which wealth can give. Wealth, then, is far from being the only good thing: nevertheless it is good, because it saves us from too severe labour, from the fear of actual want, and enables us to buy such pleasant things and services as are transferable.

7. Wealth is limited in Supply. In the second place, things cannot be called wealth unless they be limited in supply; if we have just as much of any substance as we want, then we shall not esteem a new supply of it. Thus the air around us is not wealth in ordinary circumstances, because we have only to open our mouths and we get as much as we can use. What air we do actually breathe is exceedingly useful, because it keeps us alive; but we usually pay nothing for it, because there is plenty for all. In a diving bell, or a deep mine, however, air becomes limited in supply, and then may be considered a part of wealth. When the tunnel under the English Channel is completed, it will be a great question how to get air to breathe in the middle of it. Even in the Metropolitan Railway tunnel a little more fresh air would be very valuable.

On the other hand diamonds, though much valued, are used for few purposes; they make beautiful ornaments and they serve to cut glass or to bore rocks. Their high value chiefly arises from the fact that they are scarce. Of course scarcity alone will not create value. There are many scarce metals, or minerals, of which only a few little bits have ever yet been seen; but such substances are not valuable, unless some special use has been found for them. The metal iridium is sold at a very high price because it is wanted for making the tips of gold pens, and can be got only in small quantities.

8. Wealth is useful. In the third place, we can easily see that everything which forms a part of wealth must be useful, or have utility, that is, it must serve some purpose, or be agreeable and desirable in some way or other. Senior said correctly that useful things are those which directly or indirectly produce pleasure or prevent pain. A well tuned and well played musical instrument produces pleasure; a dose of medicine prevents pain to one who is in need of it But it is often impossible to decide whether things give more pleasure or prevent more pain; dinner saves us from the pain of hunger and gives us the pleasure of eating good things. There is utility so far as pleasure is increased and pain decreased; nor does it matter, as far as political economy is concerned, what is the nature of the pleasure.

Then, again, we need not be particular as to whether things directly produce pleasure, like the clothes we wear, or whether they indirectly do so, as in the cases of the machines employed to make the clothes. Things are indirectly useful when, like tools, machines, materials, &c., they are only wanted to make other things, which shall be actually consumed and enjoyed by some person. The carriage in which a person takes a pleasant drive is directly useful; the baker's cart which brings him food is indirectly useful. But sometimes we can hardly distinguish. Shall we say that the meat put into the mouth is directly, but the fork which puts it in is indirectly, useful?

9. Commodity. We now know exactly what is wealth; but instead of speaking continually of wealth, it will often be convenient to speak of commodities, or goods. A commodity is any portion of wealth—anything, therefore, which is useful, and transferable, and limited in supply. Wool, cotton, iron, tea, books, boots, pianos, &c., are all commodities in certain circumstances, but not in all circumstances. Wool on a stray sheep lost in the mountains is not a commodity, nor iron in a mine which cannot be worked. A commodity, in short, is anything which is really useful and wanted, so that people will buy or sell it. But, instead of the long word commodity, I shall often use the shorter word goods, and the reader should remember that

goods = commodities = portion of wealth.