(4.1) Of the four sets of operations, Production, Distribution, Exchange, and Consumption,which constitute the subject of Political Economy, the first three are means. No man producesfor the sake of producing, and nothing farther. Distribution, in the same manner, is notperformed for the sake of distribution. Things are distributed, as also exchanged, to some end.
(4.2) That end is Consumption. Things are produced that they may be consumed; anddistribution and exchange are only the intermediate operations for bringing the things, whichhave been produced, into the hands of those who are to consume them.
Section I. Of Productive and Unproductive Consumption (4.i.1) Of Consumption, there are two species; the distinctive properties of which it is ofgreat importance to comprehend.
(4.i.2) These are, 1st, Productive Consumption; 2dly, Unproductive Consumption.
(4.i.3) 1. That production may take place, a certain expenditure is required. It is necessary,that the labourer should be maintained; that he should be provided with the proper instruments of hislabour, and with the materials of the commodity which it is his business to produce.
(4.i.4) What is thus expended, for the sake of something to be produced, is said to beconsumed productively.
(4.i.5) In productive consumption, three classes of things are included. The first is, thenecessaries of the labourer, under which term are included all that his wages enable him toconsume, whether these confine him to what is required for the preservation of existence, orafford him something for enjoyment. The second class of things consumed for production ismachinery; including tools of all sorts, the buildings necessary for the productive operations, andeven the cattle. The third is the materials of which the commodity to be produced must beformed, or from which it, must be derived. Such is the seed from which the corn must beproduced, the flax or wool of which the linen or woollen cloth must be formed, the drugs withwhich it must be dyed, or the coals which must be consumed in any of the necessary operations.
(4.i.6) Of these three classes of things, it is only the second, the consumption of which is notcompleted in the course of the productive operations. The machinery and buildings, employed inproduction, may last for several years; the necessaries, however, of the labourer, and thematerials, either primary or secondary, of the commodity to be produced, are all completelyconsumed. Even of the durable machinery, the wear and tear amount to a partial consumption.
(4.i.7) 2. Thus it is, that men consume for the sake of production. They also consume,however, without producing, and without any view to production. The wages which a man affords to aploughman, are given for the sake of production; the wages which he gives to his footman andhis groom, are not given for the sake of production. The flax which the manufacturer purchases,and converts into linen, he consumes productively; the wine which he purchases, and uses at histable, he consumes unproductively. These instances are sufficient to illustrate what is meant,when we speak of unproductive consumption. All consumption, which does not take place to theend that an income or revenue may be derived from it, is unproductive consumption.
(4.i.8) From this explanation, it follows, that productive consumption is itself a means; it is ameans to production. Unproductive consumption, on the other hand, is not a means. This speciesof consumption is the end. This, or the enjoyment which is involved in it, is the good whichconstituted the motive to all the operations by which it was preceded.
(4.i.9) From this explanation, it also follows, that, by productive consumption, nothing islost: no diminution is made of the property, either of the individual, or of the community; for if one thingis destroyed, another is by that means produced. The case is totally different with unproductiveconsumption. Whatever is unproductively consumed, is lost. Whatever is consumed in thismanner, is a diminution of the property, both of the individual and of the community; because,in consequence of this consumption, nothing whatever is produced. The commodity perishes inthe using, and all that is derived is the good, the pleasure, the satisfaction, which the using of ityields.
(4.i.10) That which is productively consumed is always capital. This is a property ofproductive consumption, which deserves to be particularly remarked. A man commences the manufactureof cloth with a certain capital. Part of this capital he allots for the payment of wages; anotherpart he lays out in machinery: and with what remains he purchases the raw material of his cloth,and the other articles, the use of which is required, in preparing it for the market. It thus appears,that the whole of every capital undergoes the productive consumption. It is equally obvious thatwhatever is consumed productively becomes capital; for if the manufacturer of cloth, whosecapital we have seen to be productively consumed, should save a portion of his profits, andemploy it in the different kinds of productive consumption required in his business, it wouldperform exactly the functions performed by his capital, and would, in truth, be an addition tothat capital.
(4.i.11) The whole of what the productive powers of the country have brought into existence,in the course of a year, is called the gross annual produce. Of this the greater part is required toreplace the capital which has been consumed; to restore to the capitalist what he has laid out inthe wages of his labourers and the purchase of his materials, and to remunerate him for the wearand tear of his machinery. What remain of the gross produce, after replacing the capital whichhas been consumed, is called the net produce; and is always distributed, either as profits ofstock, or as rent.
