Absolute Prices

If we wish to judge between freedom of trade and protection, to

calculate the probable effect of any political phenomenon, we should

notice how far its influence tends to the production of abundance or

scarcity, and not simply of cheapness or dearness of price. We must

beware of trusting to absolute prices, it would lead to inextricable

confusion.



Mr. Mathieu de Dombasle, after having established the fact that

protection raises prices, adds:



The augmentation of price increases the expenses of life, and

consequently the price of labor, and every one finds in the increase of

the price of his produce the same proportion as in the increase of his

expenses. Thus, if every body pays as consumer, every body receives also

as producer.



It is evident that it would be easy to reverse the argument and say: If

every body receives as producer, every body must pay as consumer.



Now, what does this prove? Nothing whatever, unless it be that

protection transfers riches, uselessly and unjustly. Robbery does the

same.



Again, to prove that the complicated arrangements of this system give

even simple compensation, it is necessary to adhere to the

consequently of Mr. de Dombasle, and to convince one's self that the

price of labor rises with that of the articles protected. This is a

question of fact, which I refer to Mr. Moreau de Jonnes, begging him to

examine whether the rate of wages was found to increase with the stock

of the mines of Anzin. For my own part I do not believe in it, because I

think that the price of labor, like every thing else, is governed by the

proportion existing between the supply and the demand. Now I can

perfectly well understand that restriction will diminish the supply of

coal, and consequently raise its price; but I do not as clearly see that

it increases the demand for labor, thereby raising the rate of wages.

This is the less conceivable to me, because the sum of labor required

depends upon the quantity of disposable capital; and protection, while

it may change the direction of capital, and transfer it from one

business to another, cannot increase it one penny.



This question, which is of the highest interest, we will examine

elsewhere. I return to the discussion of absolute prices, and declare

that there is no absurdity which cannot be rendered specious by such

reasoning as that of Mr. de Dombasle.



Imagine an isolated nation possessing a given quantity of cash, and

every year wantonly burning the half of its produce. I will undertake to

prove by the theory of Mr. de Dombasle that this nation will not be the

less rich in consequence of such a procedure.



For, the result of the conflagration must be, that every thing would

double in price. An inventory made before this event would offer exactly

the same nominal value, as one made after it. Who then would be the

loser? If John buys his cloth dearer, he also sells his corn at a higher

price; and if Peter makes a loss on the purchase of his corn, he gains

it back by the sale of his cloth. Thus every one finds in the increase

of the price of his produce, the same proportion as in the increase of

his expenses; and thus if every body pays as consumer, every body also

receives as producer.



All this is nonsense. The simple truth is: that whether men destroy

their corn and cloth by fire or by use, the effect is the same as

regards price, but not as regards riches, for it is precisely in the

enjoyment of the use, that riches--in other words, comfort,

well-being--exist.



Protection may, in the same way, while it lessens the abundance of

things, raise their prices, so as to leave each individual as rich,

numerically speaking, as when unembarrassed by it. But because we put

down in an inventory three hectolitres of corn at 20 francs, or four

hectolitres at 15 francs, and sum up the nominal value of each at 60

francs, does it thence follow that they are equally capable of

contributing to the necessities of the community?



To this view of consumption, it will be my continual endeavor to lead

the protectionists; for in this is the end of all my efforts, the

solution of every problem. I must continually repeat to them that

restriction, by impeding commerce, by limiting the division of labor, by

forcing it to combat difficulties of situation and temperature, must in

its results diminish the quantity produced by any fixed quantum of

labor. And what can it benefit us that the smaller quantity produced

under the protective system bears the same nominal value as the

greater quantity produced under the free trade system? Man does not live

on nominal values, but on real articles of produce; and the more

abundant these articles are, no matter what price they may bear, the

richer is he.