but, in general, because "the human mind's idea of means and ends makes all goods goods for the first time." (Hufeland.)

Leaving the free forces of nature, surrounded by which we live and work, out of consideration, and also the fact that all raw material is due to nature, land is the indispensable foundation of all economy. But how little can unassisted nature do to satisfy human wants! How much less to produce goods possessed of value in exchange! A virgin forest, for instance, sold in its natural state, has, indeed, value in exchange, but only because it is taken into account that it can be cleared, and that there are means of transportion already existing.1 The greater part of the forces of nature are latent to nomads and nations of hunters. When labor develops, they are set free to assist it. It is very seldom that any thing can be produced without capital. Even the poorest gatherer of wild berries needs a basket and must be clothed. Were there no capital, every individual would have to begin at the very beginning every moment. Life would be possible only in a tropical climate. No man, since the days of Adam, has been able to labor, except on the condition that a considerable advance of capital had been made upon him. There is not a nail in all England, says Senior, which cannot directly or in

1 Thus Cicero, De Off., II, 3, 4. Nature may indeed produce mere value in use without the coöperation of labor, in the narrow sense of the word; as, for instance, a forest which protects a district from avalanches etc. But "everything which has been transformed into goods tends constantly to return to its natural state, and to withdraw itself from the life of goods. Stein, Lehrbuch.

Compare List, System der Polit. Ekon. But see also the very fine discussion of F. S. Mill, Principles, IV, ch. VI, 2, on the dreariness of nature, when taken exclusive possession of by man; "with every rood of land brought into cultivation which is capable of growing food for human beings; every flowery waste or natural pasture plowed up; all quadrupeds or birds which are not domesticated for man's use, exterminated as his rivals for food; every hedgerow or superfluous tree rooted out, and scarcely a place left where a wild shrub or flower could grow, without being eradicated as a weed, in the name of improved agriculture."

3 In Paris, in 1820, the necessary tools of a rag-gatherer cost 64 francs. Garnier, Elements d'Econ.-polit., 43.

directly be traced back to savings made before the Norman conquest.*

SECTION XLVII.

PRODUCTIVE CO-OPERATION OF THE THREE FACTORS. THE THREE GREAT PERIODS OF A NATION'S ECONOMY.

The relation of the three factors to one another is necessari-) ly very different in different branches of production. For instance, in the case of cattle-raising on a prairie, labor does very little, land almost everything. Hence an extensive, thinly populated country is best adapted to this species of production. But where land is scarce, as in wealthy and populous cities, human activity should be directed into those branches of industry which need capital and labor, as manufactures and the trades. ( 198.)1

Looked at from this point of view, the history of the development of the public economy of every people may be divided into three great periods. In the earliest period, nature is the element that predominates everywhere. The woods, waters and meadows afford food almost spontaneously to a scanty population. This is the Saturnian or golden age of which the sagas tell. Wealth, properly speaking, does not exist here, and those who do not possess a piece of land run the risk of becoming completely dependent on, or even the slave of a land owner. In the second period, that through which all modern nations have passed since the later part of the middle ages, the element, labor, acquires an ever increasing importance. Labor favors the origin and development of cities as well as exclusive rights, the rights of boroughs and guilds by means of which labor is, so to speak, capitalized. A

4 It is not to be overlooked that all labor expended for a distant end also falls under the head of capital. See Droz, Economie politique, 1829, I, 6.

1 For a good exposition as to how England has need of more agricultural products, the East Indies of more capital, and the West Indies of more labor, see Fawcett, Manual of P. E., 110.

middle class is formed intermediate between the serfs and the owners of the soil. In the third period, capital, if we may so speak, gives tone to everything. The value of land is vastly increased by the expenditure of capital on it, and in manufactures, machine labor preponderates over the labor of the human hand. The national wealth undergoes a daily increase; and it is the "capitalism" which first gives an independent existence to the economic activity of man; just in the same way that law is, as it were, emancipated from land-ownership, from the church and the family only in the constitutional state (Rechtsstaat).3 But, during this period, the middle class with its moderate ease and solid culture may decrease in numbers, and colossal wealth be confronted with the most abject misery. Although these three periods may be shown to exist in the history of all highly civilized countries, the nations of antiquity, relatively speaking, never advanced far beyond the second, even in their palmiest days. A great part of that which is accomplished among us by means of capital and of machines, the Greeks and Romans performed by the labor of slaves. Leaving Christianity out of the question, nearly all the minor differences between the public economy of the ancients and that of the moderns may be reduced to this fundamental distinction.5 56

It is a very significant fact, that, at present, in certain European countries, in Germany for instance, the laborer is called a taker, and the capitalist a giver of work. The expressions employed by Canard, Say and Hermann, teach a similar lesson.

3 Schäffle, Kapitalismus und Socialismus, 124 seq.

4 It is evident, that, absolutely considered, the predominating factor of an earlier period may continue to increase during the following: and, as a rule, it does continue to increase.

5 I need cite only the instance of the slaves, who called out the hours, thus performing the functions of a clock: Martial, VIII. 67; Juvenal, X. 216; Petron. 26; of the turning of water wheels, in Egypt and Babylon, by human hands. Strabo, XVI. 738, XVII., 807. Among the ancients, it required one shepherd, and shepherd boys besides, to take care of twenty sheep. (Geopon. XVIII, 1.) In highly cultivated regions, the number ran up to fifty. (Demosth., adv. Euerg. et Mnes., 1155.) It seldom passed eighty

SECTION XLVIII.

CRITICAL HISTORY OF THE IDEA OF PRODUCTIVENESS.

In this chapter, the dogma-historical (dogmengeschichtliche) part is of the utmost importance, because it treats of the con

(Varro, De re rust., II. 10, 10. 2, 20), or one hundred (Cato, R. R. c. 10); while, recently, five men are sufficient to take care of eighteen hundred sheep. See Roscher's discourse on the relation of Political Economy to classical antiquity, in the reports of the Royal Saxon Science Association, May, 1849. Also D. Hume, Discourses, No. 10.

6 The productive power of each of the factors of production has been overestimated by some schools. After Gratian (c. 1, C. XIII. qu. 1), had clearly recognized the necessary coöperation of the three elements, there was in the one-sidedness with which the Reformers emphasized God's blessing as the only source of wealth, a great over-estimation of the factor nature. The Mercantile System over-estimated the factor capital, in one of its most obvious component parts, money. In later times again: "La terre est la source ou la matière d'où l'on tire la richesse; le travail de l'homme est la forme qui la produit. Tous les hommes d'un état subsistent et s'enrichissent aux dépens des propriétaires des terres. (Cantillon, Sur la Nature du Commerce, 1755, I. 33, 55.) La terre est l' unique source des richesses. (Quesnay, Maximes générales de Gouvernement, 1758, ch. 3.) In another place, indeed, the same writer says: les revenus sont le produit des terres et des hommes (Grains, p. 276, Daire), and Mirabeau frequently laid stress on the necessary coöperation of labor and capital. (Landwirthschaftsphilosophie, translation by Wichmann, I, 5.) Turgot, Sur la Formation et Distribution des Richesses, § 7. For an excellent refutation of this "Physiocratic" one-sidedness, which, if all men are endowed by nature with equal rights, leads to socialism, see Canard, Principes, 6. According to Gioja, N. Prospetto, I. 35, the part played by labor, in the production of Parmesan cheese, is a thousand times as great as that played by the soil; and in the production of a Dutch tulip, a hundred thousand times as great. The English are wont, similarly, to over-estimate the relative power of labor. (Ponocratie, after Ancillon, Essais philosophiques, 1817, II. 327.) "Commerce and trade first spring from the labour of men." (North, Discourses upon Trade, 112.) Thus, Locke (1690), Of Civil Government, II, 5, 40 ff., is of opinion, that, at least of the value of the products of the soil, useful to man, are to be ascribed to labor, and, in the case of most, even. And so, Berkeley (1735), Querist, No. 38 seq. This view is advocated in its boldest form,- a thing unusual in the case of the independent disciples of a great master-by McCulloch, Principles, II, ch. 1, that it is to labor, and to labor alone, that man owes everything that possesses

nection between the deepest fundamental notions and the principal branches of practical life. It is clear that every political economist must construct his exposition of productiveness on his prior notions of goods and value. We must, therefore, draw a distinction between expositions which are logical but altogether too narrow, and wholly erroneous ones.1

any value in exchange. Similarly, J. Mill, Elements (1824), III, 2. The consequences which socialism might draw from these premises are self-evident. Karl Marx's whole system, for instance, rests, without any attempt at demonstration, on the assumption that the Ricardo school is right. Much more moderate views are met with earlier. Thus, Hobbes, De Cive, XIII, 14, and Leviath., 24 (1642 and 1651), calls labor et parsimonia necessary sources of wealth; proventus terræ et aquæ useful ones; and Petty, On Taxes (1679), 47, says: "Labour is the father and active principle of wealth, as lands are the mother. Land and labour together are the sources of all wealth; without a competency of lands there would be no subsistence, and but a very poor one without labour." Harris, Upon Money and Coins, 1757, P. I. Adam Smith, also, in spite of the well known passage at the beginning of his work, very frequently lays stress on "the annual produce of land and labour." (See the passages collected in Leser, Begriff des Reichthums bei A. S., 97.) According to Leibniz, regionis potentia consistit in terra, rebus, hominibus. (ed. Dutens, IV. 2, 531.) Ricardo's school is wont to bring capital under the head of labor, as saved-up labor. This is about as correct as to say, that all that a grown man does, his parents had done. (Umpfenbach, Nat. k., 64.) There is only one way in which labor, and even then the expression is not exactly correct, can be looked upon as the only factor in production; and that is to presuppose the forces of nature as matters of course (als sich von selbst verstehend), and to call the aggregate use made of them by the human mind, labor. Or we might say with old Epicharmos, that the gods sell all goods for labor. (Xenoph., Memor. II. 1.) Moreover, even in purely intellectual productions, in poetical productions for instance, nature, labor and experience, the culture inherited from former ages (a kind of intellectual capital) uniformly coöperate. But how almost completely valueless in literature are all entirely pure (empty!) productions of the fancy!

1 Before the predominance of the Mercantile System, Montchrétien very cleverly called all trades: parcelles et fragments de cette sagesse divine que Dieu nous communique par le moyen de la raisen. By means of the three estates; labourers, artisans, merchands, tout état est nourri; par eux tout profit se fait. L'utilité règle les rangs des arts. (Traité, 12, 45, 66.) The teaching of P. Gregorius Tolosanos (ob. 1597) on the different classes of society and the different callings of men, is still more in keeping with the present doc