of an economic phenomenon? Then look for its effects on the abundance or scarcity of things and not on whether prices rise or fall. Be careful of thinking only about nominal prices;1 this will lead you into an inextricable labyrinth.
After establishing that protection makes things more expensive, M. Mathieu de Dombasle adds:
“The increase in prices raises living expenses and consequently the price of labor, (but) each person is compensated for the increase in their expenses by the increase in prices for the things they produce. Thus, if everybody pays more as a consumer, everybody also receives more as a producer.”2
It is clear that this argument can be turned on its head, and we can say: “If everybody receives more as a producer, everybody pays more as a consumer.”
Well, what does that prove? Nothing other than that protection moves wealth about uselessly and unjustly. This is just what plunder does.
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Moreover, to accept that this vast apparatus results in simple mutual compensations, we have to agree with M. de Dombasle’s word “consequently” and be sure that the price of labor rises in line with the price of protected products. This is a question of fact that I pass back to M. Moreau de Jonnès;3 let him please look into whether pay rates have moved upward in line with Anzin mining shares. For my part, I do not think so, because I believe that the price of labor, like all the others, is governed by the relationship between supply and demand. Now, I can quite see that restriction decreases the supply of coal and consequently increases its price, but I see rather less clearly that it increases the demand for labor to the extent of increasing rates of pay. I see this all the less clearly in that the quantity of labor demanded depends on the capital available. Protection may well cause capital to move and shift from one industry to another, but it cannot increase it by an obole.4
Besides, this highly interesting question will be examined elsewhere. I will return to nominal prices and say that there are no absurdities that cannot be made plausible by reasoning like M. de Dombasle’s.
Imagine that an isolated nation that had a given quantity of cash took pleasure in burning half of what it produced each year, and I will take it on myself to prove, using M. de Dombasle’s theory, that it will not be a whit the less rich.
In effect, following the fire, everything will double in price and inventories taken before and after the disaster will show exactly the same nominal value. But in this case, who will have lost? If Jean buys cloth at a higher price, he will also sell his wheat at a higher price, and if Pierre loses on his purchase of wheat, he will make good on the sale of his cloth. “Each person is compensated (I say) for the increase in the amount of their expenses by the increase in the price for the things they produce; and if everybody pays more as a consumer, everybody receives more as a producer.”
All this is a tissue of confusion rather than science. The truth expressed in its simplest form is this: whether men destroy cloth and wheat by fire or through use, the effect will be the same with respect to the price but not with respect to wealth, for it is precisely in the use of things that wealth or well-being consists.
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In the same way, restriction, while decreasing the abundance of things, may increase their price so that, if you like, in purely monetary terms, each person may be just as rich. But in an inventory, does a record of three hectoliters of wheat at 20 francs or four hectoliters at 15 francs come to the same thing from the point of view of satisfying need because the result is still 60 francs?
And it is to this point of view of consumption that I will incessantly bring protectionists back, since this is the purpose of all our efforts and the solution to all problems.5 I will always say to them: “Is it not true that by hampering trade, by limiting the division of labor, and by forcing labor to grapple with the difficulties of location and temperature, restriction ultimately decreases the quantity produced by a given amount of effort?” And what does it matter that the lesser quantity produced under a protectionist regime has the same nominal value as a larger quantity produced under the regime of freedom? Man does not live by nominal values, but by real products, and the more he has of these products, at whatever price, the richer he is.
When writing the foregoing, I did not expect ever to meet an anti-economist who was sufficiently good as a logician to contend explicitly that the wealth of peoples depends on the monetary value of things irrespective of their abundance. But just look what I have found in the book by M. de Saint-Chamans (page 210):6
“If 15 million francs worth of goods sold abroad is taken from normal production, estimated to be 50 million, the remaining 35 million worth can no longer meet normal demand and will increase in price and will reach a value of 50 million. Then the revenue of the country will be 15 million more.… There will therefore be an increase in wealth of 15 million for the country, exactly the amount of the cash which is imported.”
Is that not ridiculous! If during the year a nation makes 50 million francs’ worth of harvested products and goods, it just has to sell a quarter abroad
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to be a quarter richer! Therefore, if it sold half, it would increase its fortune by half, and if it trades for cash its last wisp of wool and last grain of wheat, it would raise its wealth to 100 million! Producing infinitely high prices through absolute scarcity is a very strange way of becoming wealthier!
Anyway, do you want to assess the merits of the two doctrines? Subject them to the exaggeration test.
According to the doctrine of M. de Saint-Chamans, the French would be just as rich, that is to say, as well provided with everything with a thousandth part of their annual output, since it would be worth a thousand times more.
According to ours, the French would be infinitely rich if their annual output was infinitely abundant and consequently was of no value at all.
12. Does Protection Increase the Rate of Pay?
PUBLISHING HISTORY:
Original title: “La protection élève-t-elle le taux des salaires?”
Place and date of first publication: No date given. First published in book form.
First French edition as book or pamphlet: Economic Sophisms (First Series) (1846).
Location in Paillottet’s edition of OC: Vol. 4. Sophismes économiques. Petits pamphlets I, pp. 74–79.
Previous translations: 1st English ed., 1846; 1st American ed., 1848; FEE ed., 1964.
An atheist was railing against religion, against priests, and against God. “If you continue,” said one of the audience, himself not very orthodox, “you are going to reconvert me.”
Thus, when we hear our beardless scribblers, romantic writers, reformers, rose-scented and musky writers of serials, gorged on ice cream and champagne, clutching in their portfolios shares of Ganneron, Nord, and Mackenzie1 or having their tirades against the egoism and individualism of the
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century heaped with gold; when we hear them, as I say, railing against the harshness of our institutions, wailing about the wage-earners and the proletariat;2 when we see them raise to the heavens eyes that mourn the sight of the destitution of the working classes, destitution that they never visit save to conjure up lucrative pictures of it, we are tempted to say to them: “If you continue in this way, you will make me indifferent to the fate of the workers.”
Oh, such affectation! This is the sickening disease of our time! Workers, if a serious man, a sincere philanthropist, reveals a picture of your distress or writes a book that makes an impression, a rabble of reformers immediately seizes this prey in its claws. It is turned one way and another, exploited, exaggerated, and squeezed to the point of disgust and ridicule. All that you are thrown by way of a remedy are the high-sounding words, organization and association.