Chapter LXVIII: Section CCX

NECESSITY OF CONSIDERING WHAT IS REALLY CONSUMED.

Whenever there is question of consumption, it is necessary to examine with rigid scrutiny, what it is that has been really consumed; that is, that has lost in utility. The person, for instance, who pays twenty dollars for a coat, has consumed that amount of capital only when the coat has been worn out.[210-1] What is called the consumption of one's income in advance is nothing but the consumption of a portion of capital which the consuming party intends to make good from his future income.[210-2] Fixed capital, too, can certainly be directly consumed; for instance, when the owner of a house treats the entire rent he receives from it as net income, makes no repairs, and no savings to put up a new building at some future time. As a rule, however, the owner of fixed capital must, in order to consume it, first exchange it against circulating capital. Thus the prodigality and dissipation, especially of courts of absolute princes, have found numerous defenders who have claimed that they are uninjurious, provided only the money spent in extravagance remained in the country.[210-3] The prodigality itself, that is, the unnecessary destruction of wealth is not, on that account, any the less disastrous.[210-4] If, for instance, there are fire-works to the amount of 10,000 dollars, manufactured exclusively by the workmen of the country, ordered for a gala day; the night before they are used for purposes of display, the national wealth embraces two separate amounts, aggregating 20,000 dollars; that is, 10,000 dollars in silver and 10,000 in rockets, etc. The day after, the 10,000 in silver are indeed still in existence, but of the 10,000 in rockets, etc., there is nothing left. If the order had been made from a foreign country the reverse would have been the case, the silver stores of the people would have been diminished, but their supply of powder would remain intact.

In a similar way, there is occasion given for the greatest misunderstanding when people so frequently speak of producers and consumers as if they were two different classes of people. Every man is a consumer of many kinds of goods; but, at the same time, he is a producer, unless he be a child, an invalid, a robber, a pick-pocket, etc.[210-5] At the same time, Bastiat is right in saying that in case of doubt when the interests of production and of consumption come in conflict, the state, as the representative of the aggregate interest, should range itself on the side of the latter. If we carry things on both sides to their extremest consequences, the self-seeking desire of consumers would lead to the utmost cheapness, that is, to universal superfluity, and the self-seeking wish of producers to the utmost dearness, that is, to universal want.[210-6]

[Footnote 210-1: Compare _Mirabeau_, Philosophie rurale, ch.
1; _Prittwitz_; Kunst reich zu werden, 474.]

[Footnote 210-2: A very important principle for the
understanding of the real effects of the spending of a state
loan!]

[Footnote 210-3: In this way _Voltaire_, Siècle de Louis
XIV., ch. 30, excuses for instance the extravagant (?)
buildings at Versailles; and in a very similar way Catharine
II. expressed herself in speaking to the Prince de Ligne:
Mémoires et Mélanges par le Prince de Ligne, 1827, II, 358.
_v. Schröder_ even thinks that the Prince might consume as
much and even more than "the entire capital" of the country
amounted to; only, he would have him "let it get quickly
among the people again." He is also in favor of the utmost
splendor in dress, provided the public see to it that
nothing was worn in the country which was not made in the
country. (Fürstl. Schatz- u. Rentkammer, 47, 172.) Similarly
even _Botero_, Della Ragion di Stato VII, 85; VIII, 191; and
recently _v. Struensee_, Abhandlungen I, 190. The principle
of Polycrates in _Herodotus_ is nearly to the same effect.
Compare, per contra, _Ferguson_, Hist. of Civil Society, V,
5.]

[Footnote 210-4: With the exception of the profit made by
the manufacturers.]

[Footnote 210-5: Strikingly ignored by _Sismondi_, N. P.,
IV, ch. II.]

[Footnote 210-6: _Bastiat_, Sophismes économiques, 1847, ch.
IV. Everything which, in the long run, either promotes or
injures production, "steps over the producer and turns in
the end to the gain or loss of the consumer." Only for this
principle, inequality and dissensions among men would keep
growing perpetually. All that the systems of Saint Simonism
and communism contain that is relatively true is thus
realized.]