Sophisms of the Protectionists Part 4

In a horse-race the load which each horse carries is weighed and all advantages equalized; otherwise there could be no compet.i.tion. In commerce, if one producer can undersell all others, he ceases to be a compet.i.tor and becomes a monopolist.... Suppress the protection which represents the difference of price according to each, and foreign productions must immediately inundate and obtain the monopoly of our market."[9]

[Footnote 9: M. le Vicomte de Romanet.]

"Every one ought to wish, for his own sake and for that of the community, that the productions of the country should be protected against foreign compet.i.tion, _whenever the latter may be able to undersell the former_."[10]

[Footnote 10: Mathieu de Dombasle.]

This argument is constantly recurring in all writings of the protectionist school. It is my intention to make a careful investigation of its merits, and I must begin by soliciting the attention and the patience of the reader. I will first examine into the inequalities which depend upon natural causes, and afterwards into those which are caused by diversity of taxes.

Here, as elsewhere, we find the theorists who favor protection, taking part with the producer. Let us consider the case of the unfortunate consumer, who seems to have entirely escaped their attention. They compare the field of production to the _turf_. But on the turf, the race is at once a _means and an end_. The public has no interest in the struggle, independent of the struggle itself. When your horses are started in the course with the single object of determining which is the best runner, nothing is more natural than that their burdens should be equalized. But if your object were to send an important and critical piece of intelligence, could you without incongruity place obstacles to the speed of that one whose fleetness would secure the best means of attaining your end? And yet this is your course in relation to industry.

You forget the end aimed at, which is the _well-being_ of the community.

But we cannot lead our opponents to look at things from our point of view, let us now take theirs; let us examine the question as producers.

I will seek to prove

1. That equalizing the facilities of production is to attack the foundations of all trade.

2. That it is not true that the labor of one country can be crushed by the compet.i.tion of more favored climates.

3. That, even were this the case, protective duties cannot equalize the facilities of production.

4. That freedom of trade equalizes these conditions as much as possible; and

5. That the countries which are the least favored by nature are those which profit most by freedom of trade.

I. The equalizing of the facilities of production, is not only the shackling of certain articles of commerce, but it is the attacking of the system of mutual exchange in its very foundation principle. For this system is based precisely upon the very diversities, or, if the expression be preferred, upon the inequalities of fertility, climate, temperature, capabilities, which the protectionists seek to render null.

If Guyenne sends its wines to Brittany, and Brittany sends corn to Guyenne, it is because these two provinces are, from different circ.u.mstances, induced to turn their attention to the production of different articles. Is there any other rule for international exchanges?

Again, to bring against such exchanges the very inequalities of condition which excite and explain them, is to attack them in their very cause of being. The protective system, closely followed up, would bring men to live like snails, in a state of complete isolation. In short, there is not one of its Sophisms, which if carried through by vigorous deductions, would not end in destruction and annihilation.

II. It is not true that the unequal facility of production, in two similar branches of industry, should necessarily cause the destruction of the one which is the least fortunate. On the turf, if one horse gains the prize, the other loses it; but when two horses work to produce any useful article, each produces in proportion to his strength; and because the stronger is the more useful, it does not follow that the weaker is good for nothing. Wheat is cultivated in every department of France, although there are great differences in the degree of fertility existing among them. If it happens that there be one which does not cultivate it, it is because, even to itself, such cultivation is not useful. a.n.a.logy will show us, that under the influence of an unshackled trade, notwithstanding similar differences, wheat would be produced in every kingdom of Europe; and if any one were induced to abandon entirely the cultivation of it, this would only be, because it would _be her interest_ to employ otherwise her lands, her capital, and her labor. And why does not the fertility of one department paralyze the agriculture of a neighboring and less favored one? Because the phenomena of political economy have a suppleness, an elasticity, and, so to speak, _a self-leveling power_, which seems to escape the attention of the school of protectionists. They accuse us of being theorists, but it is themselves who are theorists to a supreme degree, if being theoretic consists in building up systems upon the experience of a single fact, instead of profiting by the experience of a series of facts. In the above example, it is the difference in the value of lands, which compensates for the difference in their fertility. Your field produces three times as much as mine. Yes. But it has cost you three times as much, and therefore I can still compete with you: this is the sole mystery. And observe how the advantage on one point leads to disadvantage on the other. Precisely because your soil is more fruitful, it is more dear. It is not _accidentally_ but _necessarily_ that the equilibrium is established, or at least inclines to establish itself; and can it be denied that perfect freedom in exchanges is, of all the systems, the one which favors this tendency?

I have cited an agricultural example; I might as easily have taken one from any trade. There are tailors at Quimper, but that does not prevent tailors from being in Paris also, although the latter have to pay a much higher rent, as well as higher price for furniture, workmen, and food.

But their customers are sufficiently numerous not only to re-establish the balance, but also to make it lean on their side.

When therefore the question is about equalizing the advantages of labor, it would be well to consider whether the natural freedom of exchange is not the best umpire.

This self-leveling faculty of political phenomena is so important, and at the same time so well calculated to cause us to admire the providential wisdom which presides over the equalizing government of society, that I must ask permission a little longer, to turn to it the attention of the reader.

The protectionists say, Such a nation has the advantage over us, in being able to procure cheaply, coal, iron, machinery, capital; it is impossible for us to compete with it.

We must examine the proposition under other aspects. For the present, I stop at the question, whether, when an advantage and a disadvantage are placed in juxtaposition, they do not bear in themselves, the former a descending, the latter an ascending power, which must end by placing them in a just equilibrium.

Let us suppose the countries A and B. A has every advantage over B; you thence conclude that labor will be concentrated upon A, while B must be abandoned. A, you say, sells much more than it buys; B buys more than it sells. I might dispute this, but I will meet you upon your own ground.

In the hypothesis, labor, being in great demand in A, soon rises in value; while labor, iron, coal, lands, food, capital, all being little sought after in B, soon fall in price.

Again: A being always selling and B always buying, cash pa.s.ses from B to A. It is abundant in A--very scarce in B.

But where there is abundance of cash, it follows that in all purchases a large proportion of it will be needed. Then in A, _real dearness_, which proceeds from a very active demand, is added to _nominal dearness_, the consequence of a superabundance of the precious metals.

Scarcity of money implies that little is necessary for each purchase.

Then in B, a _nominal cheapness_ is combined with _real cheapness_.

Under these circ.u.mstances, industry will have the strongest possible motives for deserting A, to establish itself in B.

Now, to return to what would be the true course of things. As the progress of such events is always gradual, industry from its nature being opposed to sudden transits, let us suppose that, without waiting the extreme point, it will have gradually divided itself between A and B, according to the laws of supply and demand; that is to say, according to the laws of justice and usefulness.

I do not advance an empty hypothesis when I say, that were it possible that industry should concentrate itself upon a single point, there must, from its nature, arise spontaneously, and in its midst, an irresistible power of decentralization.

We will quote the words of a manufacturer to the Chamber of Commerce at Manchester (the figures brought into his demonstration are suppressed):

"Formerly we exported goods; this exportation gave way to that of thread for the manufacture of goods; later, instead of thread, we exported machinery for the making of thread; then capital for the construction of machinery; and lastly, workmen and talent, which are the source of capital. All these elements of labor have, one after the other, transferred themselves to other points, where their profits were increased, and where the means of subsistence being less difficult to obtain, life is maintained at a less cost. There are at present to be seen in Prussia, Austria, Saxony, Switzerland, and Italy, immense manufacturing establishments, founded entirely by English capital, worked by English labor, and directed by English talent."

We may here perceive, that Nature, or rather Providence, with more wisdom and foresight than the narrow rigid system of the protectionists can suppose, does not permit the concentration of labor, the monopoly of advantages, from which they draw their arguments as from an absolute and irremediable fact. It has, by means as simple as they are infallible, provided for dispersion, diffusion, mutual dependence, and simultaneous progress; all of which, your restrictive laws paralyze as much as is in their power, by their tendency towards the isolation of nations. By this means they render much more decided the differences existing in the conditions of production; they check the self-leveling power of industry, prevent fusion of interests, and fence in each nation within its own peculiar advantages and disadvantages.

III. To say that by a protective law the conditions of production are equalized, is to disguise an error under false terms. It is not true that an import duty equalizes the conditions of production. These remain after the imposition of the duty just as they were before. The most that the law can do is to equalize the _conditions of sale_. If it should be said that I am playing upon words, I retort the accusation upon my adversaries. It is for them to prove that _production_ and _sale_ are synonymous terms, which if they cannot do, I have a right to accuse them, if not of playing upon words, at least of confounding them.

Let me be permitted to exemplify my idea.

Suppose that several Parisian speculators should determine to devote themselves to the production of oranges. They know that the oranges of Portugal can be sold in Paris at ten centimes, whilst on account of the boxes, hot-houses, etc., which are necessary to ward against the severity of our climate, it is impossible to raise them at less than a franc apiece. They accordingly demand a duty of ninety centimes upon Portugal oranges. With the help of this duty, say they, the _conditions of production_ will be equalized. The legislative body, yielding as usual to this argument, imposes a duty of ninety centimes on each foreign orange.

Now I say that the _relative conditions of production_ are in no wise changed. The law can take nothing from the heat of the sun in Lisbon, nor from the severity of the frosts in Paris. Oranges continuing to mature themselves _naturally_ on the banks of the Tagus, and artificially upon those of the Seine, must continue to require for their production much more labor on the latter than the former. The law can only equalize the _conditions of sale_. It is evident that while the Portuguese sell their oranges at a franc apiece, the ninety centimes which go to pay the tax are taken from the French consumer. Now look at the whimsicality of the result. Upon each Portuguese orange, the country loses nothing; for the ninety centimes which the consumer pays to satisfy the tax, enter into the treasury. There is improper distribution, but no loss. Upon each French orange consumed, there will be about ninety centimes lost; for while the buyer very certainly loses them, the seller just as certainly does not gain them, for even according to the hypothesis, he will receive only the price of production. I will leave it to the protectionists to draw their conclusion.

IV. I have laid some stress upon this distinction between the conditions of production and those of sale, which perhaps the prohibitionists may consider as paradoxical, because it leads me on to what they will consider as a still stranger paradox. This is: If you really wish to equalize the facilities of production, leave trade free.

This may surprise the protectionists; but let me entreat them to listen, if it be only through curiosity, to the end of my argument. It shall not be long. I will now take it up where we left off.

If we suppose for the moment, that the common and daily profits of each Frenchman amount to one franc, it will indisputably follow that to produce an orange by _direct_ labor in France, one day's work, or its equivalent, will be requisite; whilst to produce the cost of a Portuguese orange, only one-tenth of this day's labor is required; which means simply this, that the sun does at Lisbon what labor does at Paris.

Now is it not evident, that if I can produce an orange, or, what is the same thing, the means of buying it, with one-tenth of a day's labor, I am placed exactly in the same condition as the Portuguese producer himself, excepting the expense of the transportation? It is then certain that freedom of commerce equalizes the conditions of production direct or indirect, as much as it is possible to equalize them; for it leaves but the one inevitable difference, that of transportation.

I will add that free trade equalizes also the facilities for attaining enjoyments, comforts, and general consumption; the last an object which is, it would seem, quite forgotten, and which is nevertheless all important; since consumption is the main object of all our industrial efforts. Thanks to freedom of trade, we would enjoy here the results of the Portuguese sun, as well as Portugal itself; and the inhabitants of Havre, would have in their reach, as well as those of London, and with the same facilities, the advantages which nature has in a mineralogical point of view conferred upon Newcastle.

The protectionists may suppose me in a paradoxical humor, for I go farther still. I say, and I sincerely believe, that if any two countries are placed in unequal circ.u.mstances as to advantages of production, _that one of the two which is the least favored by nature, will gain most by freedom of commerce_. To prove this, I shall be obliged to turn somewhat aside from the form of reasoning which belongs to this work. I will do so, however; first, because the question in discussion turns upon this point; and again, because it will give me the opportunity of exhibiting a law of political economy of the highest importance, and which, well understood, seems to me to be destined to lead back to this science all those sects which, in our days, are seeking in the land of chimeras that social harmony which they have been unable to discover in nature. I speak of the law of consumption, which the majority of political economists may well be reproached with having too much neglected.

Consumption is the _end_, the final cause, of all the phenomena of political economy, and, consequently, in it is found their final solution.

No effect, whether favorable or unfavorable, can be arrested permanently upon the producer. The advantages and the disadvantages, which, from his relations to nature and to society, are his, both equally pa.s.s gradually from him, with an almost insensible tendency to be absorbed and fused into the community at large; the community considered as consumers. This is an admirable law, alike in its cause and its effects, and he who shall succeed in making it well understood, will have a right to say, "I have not, in my pa.s.sage through the world, forgotten to pay my tribute to society."

Every circ.u.mstance which favors the work of production is of course hailed with joy by the producer, for its _immediate effect_ is to enable him to render greater services to the community, and to exact from it a greater remuneration. Every circ.u.mstance which injures production, must equally be the source of uneasiness to him; for its _immediate effect_ is to diminish his services, and consequently his remuneration. This is a fortunate and necessary law of nature. The immediate good or evil of favorable or unfavorable circ.u.mstances must fall upon the producer, in order to influence him invincibly to seek the one and to avoid the other.

Again, when a workman succeeds in his labor, the _immediate_ benefit of this success is received by him. This again is necessary, to determine him to devote his attention to it. It is also just; because it is just that an effort crowned with success should bring its own reward.

But these effects, good and bad, although permanent in themselves, are not so as regards the producer. If they had been so, a principle of progressive and consequently infinite _inequality_ would have been introduced among men. This good, and this evil, both therefore pa.s.s on, to become absorbed in the general destinies of humanity.

How does this come about? I will try to make it understood by some examples.

Let us go back to the thirteenth century. Men who gave themselves up to the business of copying, received for this service _a remuneration regulated by the general rate of profits_. Among them is found one, who seeks and finds the means of multiplying rapidly copies of the same work. He invents printing. The first effect of this is, that the individual is enriched, while many more are impoverished. At the first view, wonderful as the discovery is, one hesitates in deciding whether it is not more injurious than useful. It seems to have introduced into the world, as I said above, an element of infinite inequality.

Guttenberg makes large profits by this invention, and perfects the invention by the profits, until all other copyists are ruined. As for the public,--the consumer,--it gains but little, for Guttenberg takes care to lower the price of books only just so much as is necessary to undersell all rivals.