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Introduction To Stock Theory
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Introduction To Stock Theory

In that rude state of society, in which there is no division of labour,
in which exchanges are seldom made, and in which every man provides
every thing for himself, it is not necessary that any stock should be
accumulated, or stored up before-hand, in order to carry on the business
of the society. Every man endeavours to supply, by his own industry, his
own occasional wants, as they occur. When he is hungry, he goes to the
forest to hunt; when his coat is worn out, he clothes himself with the
skin of the first large animal he kills: and when his hut begins to go
to ruin, he repairs it, as well as he can, with the trees and the turf
that are nearest it.

But when the division of labour has once been thoroughly introduced, the
produce of a man's own labour can supply but a very small part of his
occasional wants. The far greater part of them are supplied by the
produce of other men's labour, which he purchases with the produce, or,
what is the same thing, with the price of the produce, of his own. But
this purchase cannot be made till such time as the produce of his
own labour has not only been completed, but sold. A stock of goods of
different kinds, therefore, must be stored up somewhere, sufficient
to maintain him, and to supply him with the materials and tools of his
work, till such time at least as both these events can be brought about.
A weaver cannot apply himself entirely to his peculiar business, unless
there is before-hand stored up somewhere, either in his own possession,
or in that of some other person, a stock sufficient to maintain him, and
to supply him with the materials and tools of his work, till he has not
only completed, but sold his web. This accumulation must evidently
be previous to his applying his industry for so long a time to such a
peculiar business.

As the accumulation of stock must, in the nature of things, be previous
to the division of labour, so labour can be more and more subdivided in
proportion only as stock is previously more and more accumulated. The
quantity of materials which the same number of people can work up,
increases in a great proportion as labour comes to be more and more
subdivided; and as the operations of each workman are gradually reduced
to a greater degree of simplicity, a variety of new machines come to
be invented for facilitating and abridging those operations. As the
division of labour advances, therefore, in order to give constant
employment to an equal number of workmen, an equal stock of provisions,
and a greater stock of materials and tools than what would have been
necessary in a ruder state of things, must be accumulated before-hand.
But the number of workmen in every branch of business generally
increases with the division of labour in that branch; or rather it is
the increase of their number which enables them to class and subdivide
themselves in this manner.

As the accumulation of stock is previously necessary for carrying on
this great improvement in the productive powers of labour, so that
accumulation naturally leads to this improvement. The person who employs
his stock in maintaining labour, necessarily wishes to employ it in
such a manner as to produce as great a quantity of work as possible. He
endeavours, therefore, both to make among his workmen the most proper
distribution of employment, and to furnish them with the best machines
which he can either invent or afford to purchase. His abilities, in both
these respects, are generally in proportion to the extent of his stock,
or to the number of people whom it can employ. The quantity of industry,
therefore, not only increases in every country with the increase of the
stock which employs it, but, in consequence of that increase, the same
quantity of industry produces a much greater quantity of work.

Such are in general the effects of the increase of stock upon industry
and its productive powers.

In the following book, I have endeavoured to explain the nature of
stock, the effects of its accumulation into capital of different kinds,
and the effects of the different employments of those capitals. This
book is divided into five chapters. In the first chapter, I have
endeavoured to shew what are the different parts or branches into which
the stock, either of an individual, or of a great society, naturally
divides itself. In the second, I have endeavoured to explain the nature
and operation of money, considered as a particular branch of the general
stock of the society. The stock which is accumulated into a capital, may
either be employed by the person to whom it belongs, or it may be
lent to some other person. In the third and fourth chapters, I have
endeavoured to examine the manner in which it operates in both these
situations. The fifth and last chapter treats of the different effects
which the different employments of capital immediately produce upon the
quantity, both of national industry, and of the annual produce of land
and labour.

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