whether they consist in wages or profit,
greatly above their natural rate.
The price of monopoly is upon every occasion
the highest which can be got. The natural
price, or the price of free competition, on
the contrary, is the lowest which can be taken,
not upon every occasion indeed, but for any
considerable time together. The one is upon
every occasion the highest which can be
squeezed out of the buyers, or which it is supposed
they will consent to give; the other is
the lowest which the sellers can commonly
afford to take, and at the same time continue
their business.
The exclusive privileges of corporations,
statutes of apprenticeship, and all those laws
which restrain in particular employments, the
competition to a smaller number than might
otherwise go into them, have the same tendency,
though in a less degree. They are a
sort of enlarged monopolies, and may frequently,
for ages together, and in whole classes
of employments, keep up the market price of
particular commodities above the natural price,
and maintain both wages of the labour and
the profits of the stock employed about them
somewhat above their natural rate.
Such enhancements of the market price may
last as long as the regulations of police which
give occasion to them.
The market price of any particular commodity,
though it may continue long above, can
seldom continue long below, its natural price.
Whatever part of it was paid below the natural
rate, the persons whose interest is affected
would immediately feel the loss, and would
immediately withdraw either so much land or
so much labour, or so much stock, from being
employed about it, that the quantity brought
to market would soon be no more than sufficient
to supply the effectual demand. Its market
price, therefore, would soon rise to the
natural price; this at least would be the case
where there was perfect liberty.
The same statutes of apprenticeship and
other corporation laws, indeed, which, when a
manufacture is in prosperity, enable the workman
to raise his wages a good deal above their
natural rate, sometimes oblige him, when it
decays, to let them down a good deal below
it. As in the one case they exclude many
people from his employment, so in the other
they exclude him from many employments.
The effect of such regulations, however, is not
near so durable in sinking the workman's
wages below, as in raising them above their
natural rate. Their operation in the one way
may endure for many centuries, but in the
other it can last no longer than the lives of
some of the workmen who were bred to the
business in the time of prosperity. When
they are gone, the number of those who are
afterwards educated to the trade will naturally
suit itself to the effectual demand. The police
must be as violent as that of Indostan or
ancient Egypt (where every man was bound
by a principle of religion to follow the occupation
of his father, and was supposed to commit
the most horrid sacrilege if he changed it
for another), which can in any particular employment,
and for several generations together,
sink either the wages of labour or the profits
of stock below their natural rate.
This is all that I think necessary to be observed
at present concerning the deviations,
whether occasional or permanent, of the market
price of commodities from the natural
price.
The natural price itself varies with the natural
rate of each of its component parts, or
wages, profit, and rent; and in every society
this rate varies according to their circumstances,
according to their riches and poverty, their
advancing, stationary, or declining condition.
I shall, in the four following chapters, endeavour
to explain, as fully and distinctly as I can,
the causes of those different variations.
First, I shall endeavour to explain what are
the circumstances which naturally determine
the rate of wages, and in what manner those
circumstances are affected by the riches or poverty,
by the advancing, stationary, or declining
state of the society.
Secondly, I shall endeavour to shew what
are the circumstances which naturally determine
the rate of profit; and in what manner,
too, those circumstances are affected by the
like variations in the state of the society.
Though pecuniary wages and profit are very
different in the different employments of labour
and stock; yet a certain proportion seems
commonly to take place between both the pecuniary
wages in all the different employments
of labour, and the pecuniary profits in all the
different employments of stock. This proportion,
it will appear hereafter, depends partly
upon the nature of the different employments,
and partly upon the different laws and
policy of the society in which they are carried
on. But though in many respects dependent
upon the laws and policy, this proportion
seems to be little affected by the riches or poverty
of that society, by its advancing, stationary,
or declining condition, but to remain
the same, or very nearly the same, in all those
different states. I shall, in the third place,
endeavour to explain all the different circumstances
which regulate this proportion.
In the fourth and last place, I shall endeavour
to shew what are the circumstances which
regulate the rent of land, and which either
raise or lower the price of all the different
substances which it produces.