# Extract Economic Entities

You are an analytical economist specializing in classical economic theory.
Your task is to extract distinct economic entities from a chapter of
Adam Smith's *The Wealth of Nations*.

## Source Chapter

---
id: book-4-chapter-09
title: "OF THE AGRICULTURAL SYSTEMS, OR OF THOSE SYSTEMS OF POLITICAL ECONOMY WHICH REPRESENT THE PRODUCE OF LAND, AS EITHER THE SOLE OR THE PRINCIPAL SOURCE OF THE REVENUE AND WEALTH OF EVERY COUNTRY."
book: "4"
chapter: 9
artifact_type: content
---

CHAPTER IX.
OF THE AGRICULTURAL SYSTEMS, OR OF
THOSE SYSTEMS OF POLITICAL ECONOMY WHICH REPRESENT THE PRODUCE OF LAND, AS
EITHER THE SOLE OR THE PRINCIPAL SOURCE OF THE REVENUE AND WEALTH OF EVERY
COUNTRY.



      The agricultural systems of political economy will not require so long an
      explanation as that which I have thought it necessary to bestow upon the
      mercantile or commercial system.

      That system which represents the produce of land as the sole source of the
      revenue and wealth of every country, has so far as I know, never been
      adopted by any nation, and it at present exists only in the speculations
      of a few men of great learning and ingenuity in France. It would not,
      surely, be worth while to examine at great length the errors of a system
      which never has done, and probably never will do, any harm in any part of
      the world. I shall endeavour to explain, however, as distinctly as I can,
      the great outlines of this very ingenious system.

      Mr Colbert, the famous minister of Lewis XIV. was a man of probity, of
      great industry, and knowledge of detail; of great experience and acuteness
      in the examination of public accounts; and of abilities, in short, every
      way fitted for introducing method and good order into the collection and
      expenditure of the public revenue. That minister had unfortunately
      embraced all the prejudices of the mercantile system, in its nature and
      essence a system of restraint and regulation, and such as could scarce
      fail to be agreeable to a laborious and plodding man of business, who had
      been accustomed to regulate the different departments of public offices,
      and to establish the necessary checks and controls for confining each to
      its proper sphere. The industry and commerce of a great country, he
      endeavoured to regulate upon the same model as the departments of a public
      office; and instead of allowing every man to pursue his own interest his
      own way, upon the liberal plan of equality, liberty, and justice, he
      bestowed upon certain branches of industry extraordinary privileges, while
      he laid others under as extraordinary restraints. He was not only
      disposed, like other European ministers, to encourage more the industry of
      the towns than that of the country; but, in order to support the industry
      of the towns, he was willing even to depress and keep down that of the
      country. In order to render provisions cheap to the inhabitants of the
      towns, and thereby to encourage manufactures and foreign commerce, he
      prohibited altogether the exportation of corn, and thus excluded the
      inhabitants of the country from every foreign market, for by far the most
      important part of the produce of their industry. This prohibition, joined
      to the restraints imposed by the ancient provincial laws of France upon
      the transportation of corn from one province to another, and to the
      arbitrary and degrading taxes which are levied upon the cultivators in
      almost all the provinces, discouraged and kept down the agriculture of
      that country very much below the state to which it would naturally have
      risen in so very fertile a soil, and so very happy a climate. This state
      of discouragement and depression was felt more or less in every different
      part of the country, and many different inquiries were set on foot
      concerning the causes of it. One of those causes appeared to be the
      preference given, by the institutions of Mr Colbert, to the industry of
      the towns above that of the country.

      If the rod be bent too much one way, says the proverb, in order to make it
      straight, you must bend it as much the other. The French philosophers, who
      have proposed the system which represents agriculture as the sole source
      of the revenue and wealth of every country, seem to have adopted this
      proverbial maxim; and, as in the plan of Mr Colbert, the industry of the
      towns was certainly overvalued in comparison with that of the country, so
      in their system it seems to be as certainly under-valued.

      The different orders of people, who have ever been supposed to contribute
      in any respect towards the annual produce of the land and labour of the
      country, they divide into three classes. The first is the class of the
      proprietors of land. The second is the class of the cultivators, of
      farmers and country labourers, whom they honour with the peculiar
      appellation of the productive class. The third is the class of artificers,
      manufacturers, and merchants, whom they endeavour to degrade by the
      humiliating appellation of the barren or unproductive class.

      The class of proprietors contributes to the annual produce, by the expense
      which they may occasionally lay out upon the improvement of the land, upon
      the buildings, drains, inclosures, and other ameliorations, which they may
      either make or maintain upon it, and by means of which the cultivators are
      enabled, with the same capital, to raise a greater produce, and
      consequently to pay a greater rent. This advanced rent may be considered
      as the interest or profit due to the proprietor, upon the expense or
      capital which he thus employs in the improvement of his land. Such
      expenses are in this system called ground expenses (depenses foncieres).

      The cultivators or farmers contribute to the annual produce, by what are
      in this system called the original and annual expenses (depenses
      primitives, et depenses annuelles), which they lay out upon the
      cultivation of the land. The original expenses consist in the instruments
      of husbandry, in the stock of cattle, in the seed, and in the maintenance
      of the farmer’s family, servants, and cattle, during at least a great part
      of the first year of his occupancy, or till he can receive some return
      from the land. The annual expenses consist in the seed, in the wear and
      tear of instruments of husbandry, and in the annual maintenance of the
      farmer’s servants and cattle, and of his family too, so far as any part of
      them can be considered as servants employed in cultivation. That part of
      the produce of the land which remains to him after paying the rent, ought
      to be sufficient, first, to replace to him, within a reasonable time, at
      least during the term of his occupancy, the whole of his original
      expenses, together with the ordinary profits of stock; and, secondly, to
      replace to him annually the whole of his annual expenses, together
      likewise with the ordinary profits of stock. Those two sorts of expenses
      are two capitals which the farmer employs in cultivation; and unless they
      are regularly restored to him, together with a reasonable profit, he
      cannot carry on his employment upon a level with other employments; but,
      from a regard to his own interest, must desert it as soon as possible, and
      seek some other. That part of the produce of the land which is thus
      necessary for enabling the farmer to continue his business, ought to be
      considered as a fund sacred to cultivation, which, if the landlord
      violates, he necessarily reduces the produce of his own land, and, in a
      few years, not only disables the farmer from paying this racked rent, but
      from paying the reasonable rent which he might otherwise have got for his
      land. The rent which properly belongs to the landlord, is no more than the
      neat produce which remains after paying, in the completest manner, all the
      necessary expenses which must be previously laid out, in order to raise
      the gross or the whole produce. It is because the labour of the
      cultivators, over and above paying completely all those necessary
      expenses, affords a neat produce of this kind, that this class of people
      are in this system peculiarly distinguished by the honourable appellation
      of the productive class. Their original and annual expenses are for the
      same reason called, In this system, productive expenses, because, over and
      above replacing their own value, they occasion the annual reproduction of
      this neat produce.

      The ground expenses, as they are called, or what the landlord lays out
      upon the improvement of his land, are, in this system, too, honoured with
      the appellation of productive expenses. Till the whole of those expenses,
      together with the ordinary profits of stock, have been completely repaid
      to him by the advanced rent which he gets from his land, that advanced
      rent ought to be regarded as sacred and inviolable, both by the church and
      by the king; ought to be subject neither to tithe nor to taxation. If it
      is otherwise, by discouraging the improvement of land, the church
      discourages the future increase of her own tithes, and the king the future
      increase of his own taxes. As in a well ordered state of things,
      therefore, those ground expenses, over and above reproducing in the
      completest manner their own value, occasion likewise, after a certain
      time, a reproduction of a neat produce, they are in this system considered
      as productive expenses.

      The ground expenses of the landlord, however, together with the original
      and the annual expenses of the farmer, are the only three sorts of
      expenses which in this system are considered as productive. All other
      expenses, and all other orders of people, even those who, in the common
      apprehensions of men, are regarded as the most productive, are, in this
      account of things, represented as altogether barren and unproductive.

      Artificers and manufacturers, in particular, whose industry, in the common
      apprehensions of men, increases so much the value of the rude produce of
      land, are in this system represented as a class of people altogether
      barren and unproductive. Their labour, it is said, replaces only the stock
      which employs them, together with its ordinary profits. That stock
      consists in the materials, tools, and wages, advanced to them by their
      employer; and is the fund destined for their employment and maintenance.
      Its profits are the fund destined for the maintenance of their employer.
      Their employer, as he advances to them the stock of materials, tools, and
      wages, necessary for their employment, so he advances to himself what is
      necessary for his own maintenance; and this maintenance he generally
      proportions to the profit which he expects to make by the price of their
      work. Unless its price repays to him the maintenance which he advances to
      himself, as well as the materials, tools, and wages, which he advances to
      his workmen, it evidently does not repay to him the whole expense which he
      lays out upon it. The profits of manufacturing stock, therefore, are not,
      like the rent of land, a neat produce which remains after completely
      repaying the whole expense which must be laid out in order to obtain them.
      The stock of the farmer yields him a profit, as well as that of the master
      manufacturer; and it yields a rent likewise to another person, which that
      of the master manufacturer does not. The expense, therefore, laid out in
      employing and maintaining artificers and manufacturers, does no more than
      continue, if one may say so, the existence of its own value, and does not
      produce any new value. It is, therefore, altogether a barren and
      unproductive expense. The expense, on the contrary, laid out in employing
      farmers and country labourers, over and above continuing the existence of
      its own value, produces a new value the rent of the landlord. It is,
      therefore, a productive expense.

      Mercantile stock is equally barren and unproductive with manufacturing
      stock. It only continues the existence of its own value, without producing
      any new value. Its profits are only the repayment of the maintenance which
      its employer advances to himself during the time that he employs it, or
      till he receives the returns of it. They are only the repayment of a part
      of the expense which must be laid out in employing it.

      The labour of artificers and manufacturers never adds any thing to the
      value of the whole annual amount of the rude produce of the land. It adds,
      indeed, greatly to the value of some particular parts of it. But the
      consumption which, in the mean time, it occasions of other parts, is
      precisely equal to the value which it adds to those parts; so that the
      value of the whole amount is not, at any one moment of time, in the least
      augmented by it. The person who works the lace of a pair of fine ruffles
      for example, will sometimes raise the value of, perhaps, a pennyworth of
      flax to £30 sterling. But though, at first sight, he appears thereby to
      multiply the value of a part of the rude produce about seven thousand and
      two hundred times, he in reality adds nothing to the value of the whole
      annual amount of the rude produce. The working of that lace costs him,
      perhaps, two years labour. The £30 which he gets for it when it is
      finished, is no more than the repayment of the subsistence which he
      advances to himself during the two years that he is employed about it. The
      value which, by every day’s, month’s, or year’s labour, he adds to the
      flax, does no more than replace the value of his own consumption during
      that day, month, or year. At no moment of time, therefore, does he add any
      thing to the value of the whole annual amount of the rude produce of the
      land: the portion of that produce which he is continually consuming, being
      always equal to the value which he is continually producing. The extreme
      poverty of the greater part of the persons employed in this expensive,
      though trifling manufacture, may satisfy us that the price of their work
      does not, in ordinary cases, exceed the value of their subsistence. It is
      otherwise with the work of farmers and country labourers. The rent of the
      landlord is a value which, in ordinary cases, it is continually producing
      over and above replacing, in the most complete manner, the whole
      consumption, the whole expense laid out upon the employment and
      maintenance both of the workmen and of their employer.

      Artificers, manufacturers, and merchants, can augment the revenue and
      wealth of their society by parsimony only; or, as it is expressed in this
      system, by privation, that is, by depriving themselves of a part of the
      funds destined for their own subsistence. They annually reproduce nothing
      but those funds. Unless, therefore, they annually save some part of them,
      unless they annually deprive themselves of the enjoyment of some part of
      them, the revenue and wealth of their society can never be, in the
      smallest degree, augmented by means of their industry. Farmers and country
      labourers, on the contrary, may enjoy completely the whole funds destined
      for their own subsistence, and yet augment, at the same time, the revenue
      and wealth of their society. Over and above what is destined for their own
      subsistence, their industry annually affords a neat produce, of which the
      augmentation necessarily augments the revenue and wealth of their society.
      Nations, therefore, which, like France or England, consist in a great
      measure, of proprietors and cultivators, can be enriched by industry and
      enjoyment. Nations, on the contrary, which, like Holland and Hamburgh, are
      composed chiefly of merchants, artificers, and manufacturers, can grow
      rich only through parsimony and privation. As the interest of nations so
      differently circumstanced is very different, so is likewise the common
      character of the people. In those of the former kind, liberality,
      frankness, and good fellowship, naturally make a part of their common
      character; in the latter, narrowness, meanness, and a selfish disposition,
      averse to all social pleasure and enjoyment.

      The unproductive class, that of merchants, artificers, and manufacturers,
      is maintained and employed altogether at the expense of the two other
      classes, of that of proprietors, and of that of cultivators. They furnish
      it both with the materials of its work, and with the fund of its
      subsistence, with the corn and cattle which it consumes while it is
      employed about that work. The proprietors and cultivators finally pay both
      the wages of all the workmen of the unproductive class, and the profits of
      all their employers. Those workmen and their employers are properly the
      servants of the proprietors and cultivators. They are only servants who
      work without doors, as menial servants work within. Both the one and the
      other, however, are equally maintained at the expense of the same masters.
      The labour of both is equally unproductive. It adds nothing to the value
      of the sum total of the rude produce of the land. Instead of increasing
      the value of that sum total, it is a charge and expense which must be paid
      out of it.

      The unproductive class, however, is not only useful, but greatly useful,
      to the other two classes. By means of the industry of merchants,
      artificers, and manufacturers, the proprietors and cultivators can
      purchase both the foreign goods and the manufactured produce of their own
      country, which they have occasion for, with the produce of a much smaller
      quantity of their own labour, than what they would be obliged to employ,
      if they were to attempt, in an awkward and unskilful manner, either to
      import the one, or to make the other, for their own use. By means of the
      unproductive class, the cultivators are delivered from many cares, which
      would otherwise distract their attention from the cultivation of land. The
      superiority of produce, which in consequence of this undivided attention,
      they are enabled to raise, is fully sufficient to pay the whole expense
      which the maintenance and employment of the unproductive class costs
      either the proprietors or themselves. The industry of merchants,
      artificers, and manufacturers, though in its own nature altogether
      unproductive, yet contributes in this manner indirectly to increase the
      produce of the land. It increases the productive powers of productive
      labour, by leaving it at liberty to confine itself to its proper
      employment, the cultivation of land; and the plough goes frequently the
      easier and the better, by means of the labour of the man whose business is
      most remote from the plough.

      It can never be the interest of the proprietors and cultivators, to
      restrain or to discourage, in any respect, the industry of merchants,
      artificers, and manufacturers. The greater the liberty which this
      unproductive class enjoys, the greater will be the competition in all the
      different trades which compose it, and the cheaper will the other two
      classes be supplied, both with foreign goods and with the manufactured
      produce of their own country.

      It can never be the interest of the unproductive class to oppress the
      other two classes. It is the surplus produce of the land, or what remains
      after deducting the maintenance, first of the cultivators, and afterwards
      of the proprietors, that maintains and employs the unproductive class. The
      greater this surplus, the greater must likewise be the maintenance and
      employment of that class. The establishment of perfect justice, of perfect
      liberty, and of perfect equality, is the very simple secret which most
      effectually secures the highest degree of prosperity to all the three
      classes.

      The merchants, artificers, and manufacturers of those mercantile states,
      which, like Holland and Hamburgh, consist chiefly of this unproductive
      class, are in the same manner maintained and employed altogether at the
      expense of the proprietors and cultivators of land. The only difference
      is, that those proprietors and cultivators are, the greater part of them,
      placed at a most inconvenient distance from the merchants, artificers, and
      manufacturers, whom they supply with the materials of their work and the
      fund of their subsistence; are the inhabitants of other countries, and the
      subjects of other governments.

      Such mercantile states, however, are not only useful, but greatly useful,
      to the inhabitants of those other countries. They fill up, in some
      measure, a very important void; and supply the place of the merchants,
      artificers, and manufacturers, whom the inhabitants of those countries
      ought to find at home, but whom, from some defect in their policy, they do
      not find at home.

      It can never be the interest of those landed nations, if I may call them
      so, to discourage or distress the industry of such mercantile states, by
      imposing high duties upon their trade, or upon the commodities which they
      furnish. Such duties, by rendering those commodities dearer, could serve
      only to sink the real value of the surplus produce of their own land, with
      which, or, what comes to the same thing, with the price of which those
      commodities are purchased. Such duties could only serve to discourage the
      increase of that surplus produce, and consequently the improvement and
      cultivation of their own land. The most effectual expedient, on the
      contrary, for raising the value of that surplus produce, for encouraging
      its increase, and consequently the improvement and cultivation of their
      own land, would be to allow the most perfect freedom to the trade of all
      such mercantile nations.

      This perfect freedom of trade would even be the most effectual expedient
      for supplying them, in due time, with all the artificers, manufacturers,
      and merchants, whom they wanted at home; and for filling up, in the
      properest and most advantageous manner, that very important void which
      they felt there.

      The continual increase of the surplus produce of their land would, in due
      time, create a greater capital than what would be employed with the
      ordinary rate of profit in the improvement and cultivation of land; and
      the surplus part of it would naturally turn itself to the employment of
      artificers and manufacturers, at home. But these artificers and
      manufacturers, finding at home both the materials of their work and the
      fund of their subsistence, might immediately, even with much less art and
      skill be able to work as cheap as the little artificers and manufacturers
      of such mercantile states, who had both to bring from a greater distance.
      Even though, from want of art and skill, they might not for some time be
      able to work as cheap, yet, finding a market at home, they might be able
      to sell their work there as cheap as that of the artificers and
      manufacturers of such mercantile states, which could not be brought to
      that market but from so great a distance; and as their art and skill
      improved, they would soon be able to sell it cheaper. The artificers and
      manufacturers of such mercantile states, therefore, would immediately be
      rivalled in the market of those landed nations, and soon after undersold
      and justled out of it altogether. The cheapness of the manufactures of
      those landed nations, in consequence of the gradual improvements of art
      and skill, would, in due time, extend their sale beyond the home market,
      and carry them to many foreign markets, from which they would, in the same
      manner, gradually justle out many of the manufacturers of such mercantile
      nations.

      This continual increase, both of the rude and manufactured produce of
      those landed nations, would, in due time, create a greater capital than
      could, with the ordinary rate of profit, be employed either in agriculture
      or in manufactures. The surplus of this capital would naturally turn
      itself to foreign trade and be employed in exporting, to foreign
      countries, such parts of the rude and manufactured produce of its own
      country, as exceeded the demand of the home market. In the exportation of
      the produce of their own country, the merchants of a landed nation would
      have an advantage of the same kind over those of mercantile nations, which
      its artificers and manufacturers had over the artificers and manufacturers
      of such nations; the advantage of finding at home that cargo, and those
      stores and provisions, which the others were obliged to seek for at a
      distance. With inferior art and skill in navigation, therefore, they would
      be able to sell that cargo as cheap in foreign markets as the merchants of
      such mercantile nations; and with equal art and skill they would be able
      to sell it cheaper. They would soon, therefore, rival those mercantile
      nations in this branch of foreign trade, and, in due time, would justle
      them out of it altogether.

      According to this liberal and generous system, therefore, the most
      advantageous method in which a landed nation can raise up artificers,
      manufacturers, and merchants of its own, is to grant the most perfect
      freedom of trade to the artificers, manufacturers, and merchants of all
      other nations. It thereby raises the value of the surplus produce of its
      own land, of which the continual increase gradually establishes a fund,
      which, in due time, necessarily raises up all the artificers,
      manufacturers, and merchants, whom it has occasion for.

      When a landed nation on the contrary, oppresses, either by high duties or
      by prohibitions, the trade of foreign nations, it necessarily hurts its
      own interest in two different ways. First, by raising the price of all
      foreign goods, and of all sorts of manufactures, it necessarily sinks the
      real value of the surplus produce of its own land, with which, or, what
      comes to the same thing, with the price of which, it purchases those
      foreign goods and manufactures. Secondly, by giving a sort of monopoly of
      the home market to its own merchants, artificers, and manufacturers, it
      raises the rate of mercantile and manufacturing profit, in proportion to
      that of agricultural profit; and, consequently, either draws from
      agriculture a part of the capital which had before been employed in it, or
      hinders from going to it a part of what would otherwise have gone to it.
      This policy, therefore, discourages agriculture in two different ways;
      first, by sinking the real value of its produce, and thereby lowering the
      rate of its profits; and, secondly, by raising the rate of profit in all
      other employments. Agriculture is rendered less advantageous, and trade
      and manufactures more advantageous, than they otherwise would be; and
      every man is tempted by his own interest to turn, as much as he can, both
      his capital and his industry from the former to the latter employments.

      Though, by this oppressive policy, a landed nation should be able to raise
      up artificers, manufacturers, and merchants of its own, somewhat sooner
      than it could do by the freedom of trade; a matter, however, which is not
      a little doubtful; yet it would raise them up, if one may say so,
      prematurely, and before it was perfectly ripe for them. By raising up too
      hastily one species of industry, it would depress another more valuable
      species of industry. By raising up too hastily a species of industry which
      duly replaces the stock which employs it, together with the ordinary
      profit, it would depress a species of industry which, over and above
      replacing that stock, with its profit, affords likewise a neat produce, a
      free rent to the landlord. It would depress productive labour, by
      encouraging too hastily that labour which is altogether barren and
      unproductive.

      In what manner, according to this system, the sum total of the annual
      produce of the land is distributed among the three classes above
      mentioned, and in what manner the labour of the unproductive class does no
      more than replace the value of its own consumption, without increasing in
      any respect the value of that sum total, is represented by Mr Quesnai, the
      very ingenious and profound author of this system, in some arithmetical
      formularies. The first of these formularies, which, by way of eminence, he
      peculiarly distinguishes by the name of the Economical Table, represents
      the manner in which he supposes this distribution takes place, in a state
      of the most perfect liberty, and, therefore, of the highest prosperity; in
      a state where the annual produce is such as to afford the greatest
      possible neat produce, and where each class enjoys its proper share of the
      whole annual produce. Some subsequent formularies represent the manner in
      which he supposes this distribution is made in different states of
      restraint and regulation; in which, either the class of proprietors, or
      the barren and unproductive class, is more favoured than the class of
      cultivators; and in which either the one or the other encroaches, more or
      less, upon the share which ought properly to belong to this productive
      class. Every such encroachment, every violation of that natural
      distribution, which the most perfect liberty would establish, must,
      according to this system, necessarily degrade, more or less, from one year
      to another, the value and sum total of the annual produce, and must
      necessarily occasion a gradual declension in the real wealth and revenue
      of the society; a declension, of which the progress must be quicker or
      slower, according to the degree of this encroachment, according as that
      natural distribution, which the most perfect liberty would establish, is
      more or less violated. Those subsequent formularies represent the
      different degrees of declension which, according to this system,
      correspond to the different degrees in which this natural distribution of
      things is violated.

      Some speculative physicians seem to have imagined that the health of the
      human body could be preserved only by a certain precise regimen of diet
      and exercise, of which every, the smallest violation, necessarily
      occasioned some degree of disease or disorder proportionate to the degree
      of the violation. Experience, however, would seem to shew, that the human
      body frequently preserves, to all appearance at least, the most perfect
      state of health under a vast variety of different regimens; even under
      some which are generally believed to be very far from being perfectly
      wholesome. But the healthful state of the human body, it would seem,
      contains in itself some unknown principle of preservation, capable either
      of preventing or of correcting, in many respects, the bad effects even of
      a very faulty regimen. Mr Quesnai, who was himself a physician, and a very
      speculative physician, seems to have entertained a notion of the same kind
      concerning the political body, and to have imagined that it would thrive
      and prosper only under a certain precise regimen, the exact regimen of
      perfect liberty and perfect justice. He seems not to have considered, that
      in the political body, the natural effort which every man is continually
      making to better his own condition, is a principle of preservation capable
      of preventing and correcting, in many respects, the bad effects of a
      political economy, in some degree both partial and oppressive. Such a
      political economy, though it no doubt retards more or less, is not always
      capable of stopping altogether, the natural progress of a nation towards
      wealth and prosperity, and still less of making it go backwards. If a
      nation could not prosper without the enjoyment of perfect liberty and
      perfect justice, there is not in the world a nation which could ever have
      prospered. In the political body, however, the wisdom of nature has
      fortunately made ample provision for remedying many of the bad effects of
      the folly and injustice of man; it the same manner as it has done in the
      natural body, for remedying those of his sloth and intemperance.

      The capital error of this system, however, seems to lie in its
      representing the class of artificers, manufacturers, and merchants, as
      altogether barren and unproductive. The following observations may serve
      to shew the impropriety of this representation:—

      First, this class, it is acknowledged, reproduces annually the value of
      its own annual consumption, and continues, at least, the existence of the
      stock or capital which maintains and employs it. But, upon this account
      alone, the denomination of barren or unproductive should seem to be very
      improperly applied to it. We should not call a marriage barren or
      unproductive, though it produced only a son and a daughter, to replace the
      father and mother, and though it did not increase the number of the human
      species, but only continued it as it was before. Farmers and country
      labourers, indeed, over and above the stock which maintains and employs
      them, reproduce annually a neat produce, a free rent to the landlord. As a
      marriage which affords three children is certainly more productive than
      one which affords only two, so the labour of farmers and country labourers
      is certainly more productive than that of merchants, artificers, and
      manufacturers. The superior produce of the one class, however, does not,
      render the other barren or unproductive.

      Secondly, it seems, on this account, altogether improper to consider
      artificers, manufacturers, and merchants, in the same light as menial
      servants. The labour of menial servants does not continue the existence of
      the fund which maintains and employs them. Their maintenance and
      employment is altogether at the expense of their masters, and the work
      which they perform is not of a nature to repay that expense. That work
      consists in services which perish generally in the very instant of their
      performance, and does not fix or realize itself in any vendible commodity,
      which can replace the value of their wages and maintenance. The labour, on
      the contrary, of artificers, manufacturers, and merchants, naturally does
      fix and realize itself in some such vendible commodity. It is upon this
      account that, in the chapter in which I treat of productive and
      unproductive labour, I have classed artificers, manufacturers, and
      merchants among the productive labourers, and menial servants among the
      barren or unproductive.

      Thirdly, it seems, upon every supposition, improper to say, that the
      labour of artificers, manufacturers, and merchants, does not increase the
      real revenue of the society. Though we should suppose, for example, as it
      seems to be supposed in this system, that the value of the daily, monthly,
      and yearly consumption of this class was exactly equal to that of its
      daily, monthly, and yearly production; yet it would not from thence
      follow, that its labour added nothing to the real revenue, to the real
      value of the annual produce of the land and labour of the society. An
      artificer, for example, who, in the first six months after harvest,
      executes ten pounds worth of work, though he should, in the same time,
      consume ten pounds worth of corn and other necessaries, yet really adds
      the value of ten pounds to the annual produce of the land and labour of
      the society. While he has been consuming a half-yearly revenue of ten
      pounds worth of corn and other necessaries, he has produced an equal value
      of work, capable of purchasing, either to himself, or to some other
      person, an equal half-yearly revenue. The value, therefore, of what has
      been consumed and produced during these six months, is equal, not to ten,
      but to twenty pounds. It is possible, indeed, that no more than ten pounds
      worth of this value may ever have existed at any one moment of time. But
      if the ten pounds worth of corn and other necessaries which were consumed
      by the artificer, had been consumed by a soldier, or by a menial servant,
      the value of that part of the annual produce which existed at the end of
      the six months, would have been ten pounds less than it actually is in
      consequence of the labour of the artificer. Though the value of what the
      artificer produces, therefore, should not, at any one moment of time, be
      supposed greater than the value he consumes, yet, at every moment of time,
      the actually existing value of goods in the market is, in consequence of
      what he produces, greater than it otherwise would be.

      When the patrons of this system assert, that the consumption of
      artificers, manufacturers, and merchants, is equal to the value of what
      they produce, they probably mean no more than that their revenue, or the
      fund destined for their consumption, is equal to it. But if they had
      expressed themselves more accurately, and only asserted, that the revenue
      of this class was equal to the value of what they produced, it might
      readily have occurred to the reader, that what would naturally be saved
      out of this revenue, must necessarily increase more or less the real
      wealth of the society. In order, therefore, to make out something like an
      argument, it was necessary that they should express themselves as they
      have done; and this argument, even supposing things actually were as it
      seems to presume them to be, turns out to be a very inconclusive one.

      Fourthly, farmers and country labourers can no more augment, without
      parsimony, the real revenue, the annual produce of the land and labour of
      their society, than artificers, manufacturers, and merchants. The annual
      produce of the land and labour of any society can be augmented only in two
      ways; either, first, by some improvement in the productive powers of the
      useful labour actually maintained within it; or, secondly, by some
      increase in the quantity of that labour.

      The improvement in the productive powers of useful labour depends, first,
      upon the improvement in the ability of the workman; and, secondly, upon
      that of the machinery with which he works. But the labour of artificers
      and manufacturers, as it is capable of being more subdivided, and the
      labour of each workman reduced to a greater simplicity of operation, than
      that of farmers and country labourers; so it is likewise capable of both
      these sorts of improvement in a much higher degree {See book i chap. 1.}
      In this respect, therefore, the class of cultivators can have no sort of
      advantage over that of artificers and manufacturers.

      The increase in the quantity of useful labour actually employed within any
      society must depend altogether upon the increase of the capital which
      employs it; and the increase of that capital, again, must be exactly equal
      to the amount of the savings from the revenue, either of the particular
      persons who manage and direct the employment of that capital, or of some
      other persons, who lend it to them. If merchants, artificers, and
      manufacturers are, as this system seems to suppose, naturally more
      inclined to parsimony and saving than proprietors and cultivators, they
      are, so far, more likely to augment the quantity of useful labour employed
      within their society, and consequently to increase its real revenue, the
      annual produce of its land and labour.

      Fifthly and lastly, though the revenue of the inhabitants of every country
      was supposed to consist altogether, as this system seems to suppose, in
      the quantity of subsistence which their industry could procure to them;
      yet, even upon this supposition, the revenue of a trading and
      manufacturing country must, other things being equal, always be much
      greater than that of one without trade or manufactures. By means of trade
      and manufactures, a greater quantity of subsistence can be annually
      imported into a particular country, than what its own lands, in the actual
      state of their cultivation, could afford. The inhabitants of a town,
      though they frequently possess no lands of their own, yet draw to
      themselves, by their industry, such a quantity of the rude produce of the
      lands of other people, as supplies them, not only with the materials of
      their work, but with the fund of their subsistence. What a town always is
      with regard to the country in its neighbourhood, one independent state or
      country may frequently be with regard to other independent states or
      countries. It is thus that Holland draws a great part of its subsistence
      from other countries; live cattle from Holstein and Jutland, and corn from
      almost all the different countries of Europe. A small quantity of
      manufactured produce, purchases a great quantity of rude produce. A
      trading and manufacturing country, therefore, naturally purchases, with a
      small part of its manufactured produce, a great part of the rude produce
      of other countries; while, on the contrary, a country without trade and
      manufactures is generally obliged to purchase, at the expense of a great
      part of its rude produce, a very small part of the manufactured produce of
      other countries. The one exports what can subsist and accommodate but a
      very few, and imports the subsistence and accommodation of a great number.
      The other exports the accommodation and subsistence of a great number, and
      imports that of a very few only. The inhabitants of the one must always
      enjoy a much greater quantity of subsistence than what their own lands, in
      the actual state of their cultivation, could afford. The inhabitants of
      the other must always enjoy a much smaller quantity.

      This system, however, with all its imperfections, is perhaps the nearest
      approximation to the truth that has yet been published upon the subject of
      political economy; and is upon that account, well worth the consideration
      of every man who wishes to examine with attention the principles of that
      very important science. Though in representing the labour which is
      employed upon land as the only productive labour, the notions which it
      inculcates are, perhaps, too narrow and confined; yet in representing the
      wealth of nations as consisting, not in the unconsumable riches of money,
      but in the consumable goods annually reproduced by the labour of the
      society, and in representing perfect liberty as the only effectual
      expedient for rendering this annual reproduction the greatest possible,
      its doctrine seems to be in every respect as just as it is generous and
      liberal. Its followers are very numerous; and as men are fond of
      paradoxes, and of appearing to understand what surpasses the
      comprehensions of ordinary people, the paradox which it maintains,
      concerning the unproductive nature of manufacturing labour, has not,
      perhaps, contributed a little to increase the number of its admirers. They
      have for some years past made a pretty considerable sect, distinguished in
      the French republic of letters by the name of the Economists. Their works
      have certainly been of some service to their country; not only by bringing
      into general discussion, many subjects which had never been well examined
      before, but by influencing, in some measure, the public administration in
      favour of agriculture. It has been in consequence of their
      representations, accordingly, that the agriculture of France has been
      delivered from several of the oppressions which it before laboured under.
      The term, during which such a lease can be granted, as will be valid
      against every future purchaser or proprietor of the land, has been
      prolonged from nine to twenty-seven years. The ancient provincial
      restraints upon the transportation of corn from one province of the
      kingdom to another, have been entirely taken away; and the liberty of
      exporting it to all foreign countries, has been established as the common
      law of the kingdom in all ordinary cases. This sect, in their works, which
      are very numerous, and which treat not only of what is properly called
      Political Economy, or of the nature and causes or the wealth of nations,
      but of every other branch of the system of civil government, all follow
      implicitly, and without any sensible variation, the doctrine of Mr
      Qttesnai. There is, upon this account, little variety in the greater part
      of their works. The most distinct and best connected account of this
      doctrine is to be found in a little book written by Mr Mercier de la
      Riviere, some time intendant of Martinico, entitled, The natural and
      essential Order of Political Societies. The admiration of this whole sect
      for their master, who was himself a man of the greatest modesty and
      simplicity, is not inferior to that of any of the ancient philosophers for
      the founders of their respective systems. ‘There have been since the world
      began,’ says a very diligent and respectable author, the Marquis de
      Mirabeau, ‘three great inventions which have principally given stability
      to political societies, independent of many other inventions which have
      enriched and adorned them. The first is the invention of writing, which
      alone gives human nature the power of transmitting, without alteration,
      its laws, its contracts, its annals, and its discoveries. The second is
      the invention of money, which binds together all the relations between
      civilized societies. The third is the economical table, the result of the
      other two, which completes them both by perfecting their object; the great
      discovery of our age, but of which our posterity will reap the benefit.’

      As the political economy of the nations of modern Europe has been more
      favourable to manufactures and foreign trade, the industry of the towns,
      than to agriculture, the industry of the country; so that of other nations
      has followed a different plan, and has been more favourable to agriculture
      than to manufactures and foreign trade.

      The policy of China favours agriculture more than all other employments.
      In China, the condition of a labourer is said to be as much superior to
      that of an artificer, as in most parts of Europe that of an artificer is
      to that of a labourer. In China, the great ambition of every man is to get
      possession of a little bit of land, either in property or in lease; and
      leases are there said to be granted upon very moderate terms, and to be
      sufficiently secured to the lessees. The Chinese have little respect for
      foreign trade. Your beggarly commerce! was the language in which the
      mandarins of Pekin used to talk to Mr De Lange, the Russian envoy,
      concerning it {See the Journal of Mr De Lange, in Bell’s Travels, vol.
      ii. p. 258, 276, 293.}. Except with Japan, the Chinese carry on,
      themselves, and in their own bottoms, little or no foreign trade; and it
      is only into one or two ports of their kingdom that they even admit the
      ships of foreign nations. Foreign trade, therefore, is, in China, every
      way confined within a much narrower circle than that to which it would
      naturally extend itself, if more freedom was allowed to it, either in
      their own ships, or in those of foreign nations.

      Manufactures, as in a small bulk they frequently contain a great value,
      and can upon that account be transported at less expense from one country
      to another than most parts of rude produce, are, in almost all countries,
      the principal support of foreign trade. In countries, besides, less
      extensive, and less favourably circumstanced for inferior commerce than
      China, they generally require the support of foreign trade. Without an
      extensive foreign market, they could not well flourish, either in
      countries so moderately extensive as to afford but a narrow home market,
      or in countries where the communication between one province and another
      was so difficult, as to render it impossible for the goods of any
      particular place to enjoy the whole of that home market which the country
      could afford. The perfection of manufacturing industry, it must be
      remembered, depends altogether upon the division of labour; and the degree
      to which the division of labour can be introduced into any manufacture, is
      necessarily regulated, it has already been shewn, by the extent of the
      market. But the great extent of the empire of China, the vast multitude of
      its inhabitants, the variety of climate, and consequently of productions
      in its different provinces, and the easy communication by means of
      water-carriage between the greater part of them, render the home market of
      that country of so great extent, as to be alone sufficient to support very
      great manufactures, and to admit of very considerable subdivisions of
      labour. The home market of China is, perhaps, in extent, not much inferior
      to the market of all the different countries of Europe put together. A
      more extensive foreign trade, however, which to this great home market
      added the foreign market of all the rest of the world, especially if any
      considerable part of this trade was carried on in Chinese ships, could
      scarce fail to increase very much the manufactures of China, and to
      improve very much the productive powers of its manufacturing industry. By
      a more extensive navigation, the Chinese would naturally learn the art of
      using and constructing, themselves, all the different machines made use of
      in other countries, as well as the other improvements of art and industry
      which are practised in all the different parts of the world. Upon their
      present plan, they have little opportunity of improving themselves by the
      example of any other nation, except that of the Japanese.

      The policy of ancient Egypt, too, and that of the Gentoo government of
      Indostan, seem to have favoured agriculture more than all other
      employments.

      Both in ancient Egypt and Indostan, the whole body of the people was
      divided into different casts or tribes each of which was confined, from
      father to son, to a particular employment, or class of employments. The
      son of a priest was necessarily a priest; the son of a soldier, a soldier;
      the son of a labourer, a labourer; the son of a weaver, a weaver; the son
      of a tailor, a tailor, etc. In both countries, the cast of the priests
      holds the highest rank, and that of the soldiers the next; and in both
      countries the cast of the farmers and labourers was superior to the casts
      of merchants and manufacturers.

      The government of both countries was particularly attentive to the
      interest of agriculture. The works constructed by the ancient sovereigns
      of Egypt, for the proper distribution of the waters of the Nile, were
      famous in antiquity, and the ruined remains of some of them are still the
      admiration of travellers. Those of the same kind which were constructed by
      the ancient sovereigns of Indostan, for the proper distribution of the
      waters of the Ganges, as well as of many other rivers, though they have
      been less celebrated, seem to have been equally great. Both countries,
      accordingly, though subject occasionally to dearths, have been famous for
      their great fertility. Though both were extremely populous, yet, in years
      of moderate plenty, they were both able to export great quantities of
      grain to their neighbours.

      The ancient Egyptians had a superstitious aversion to the sea; and as the
      Gentoo religion does not permit its followers to light a fire, nor
      consequently to dress any victuals, upon the water, it, in effect,
      prohibits them from all distant sea voyages. Both the Egyptians and
      Indians must have depended almost altogether upon the navigation of other
      nations for the exportation of their surplus produce; and this dependency,
      as it must have confined the market, so it must have discouraged the
      increase of this surplus produce. It must have discouraged, too, the
      increase of the manufactured produce, more than that of the rude produce.
      Manufactures require a much more extensive market than the most important
      parts of the rude produce of the land. A single shoemaker will make more
      than 300 pairs of shoes in the year; and his own family will not, perhaps,
      wear out six pairs. Unless, therefore, he has the custom of, at least, 50
      such families as his own, he cannot dispose of the whole product of his
      own labour. The most numerous class of artificers will seldom, in a large
      country, make more than one in 50, or one in a 100, of the whole number of
      families contained in it. But in such large countries, as France and
      England, the number of people employed in agriculture has, by some authors
      been computed at a half, by others at a third and by no author that I know
      of, at less that a fifth of the whole inhabitants of the country. But as
      the produce of the agriculture of both France and England is, the far
      greater part of it, consumed at home, each person employed in it must,
      according to these computations, require little more than the custom of
      one, two, or, at most, of four such families as his own, in order to
      dispose of the whole produce of his own labour. Agriculture, therefore,
      can support itself under the discouragement of a confined market much
      better than manufactures. In both ancient Egypt and Indostan, indeed, the
      confinement of the foreign market was in some measure compensated by the
      conveniency of many inland navigations, which opened, in the most
      advantageous manner, the whole extent of the home market to every part of
      the produce of every different district of those countries. The great
      extent of Indostan, too, rendered the home market of that country very
      great, and sufficient to support a great variety of manufactures. But the
      small extent of ancient Egypt, which was never equal to England, must at
      all times, have rendered the home market of that country too narrow for
      supporting any great variety of manufactures. Bengal accordingly, the
      province of Indostan which commonly exports the greatest quantity of rice,
      has always been more remarkable for the exportation of a great variety of
      manufactures, than for that of its grain. Ancient Egypt, on the contrary,
      though it exported some manufactures, fine linen in particular, as well as
      some other goods, was always most distinguished for its great exportation
      of grain. It was long the granary of the Roman empire.

      The sovereigns of China, of ancient Egypt, and of the different kingdoms
      into which Indostan has, at different times, been divided, have always
      derived the whole, or by far the most considerable part, of their revenue,
      from some sort of land tax or land rent. This land tax, or land rent, like
      the tithe in Europe, consisted in a certain proportion, a fifth, it is
      said, of the produce of the land, which was either delivered in kind, or
      paid in money, according to a certain valuation, and which, therefore,
      varied from year to year, according to all the variations of the produce.
      It was natural, therefore, that the sovereigns of those countries should
      be particularly attentive to the interests of agriculture, upon the
      prosperity or declension of which immediately depended the yearly increase
      or diminution of their own revenue.

      The policy of the ancient republics of Greece, and that of Rome, though it
      honoured agriculture more than manufactures or foreign trade, yet seems
      rather to have discouraged the latter employments, than to have given any
      direct or intentional encouragement to the former. In several of the
      ancient states of Greece, foreign trade was prohibited altogether; and in
      several others, the employments of artificers and manufacturers were
      considered as hurtful to the strength and agility of the human body, as
      rendering it incapable of those habits which their military and gymnastic
      exercises endeavoured to form in it, and as thereby disqualifying it, more
      or less, for undergoing the fatigues and encountering the dangers of war.
      Such occupations were considered as fit only for slaves, and the free
      citizens of the states were prohibited from exercising them. Even in those
      states where no such prohibition took place, as in Rome and Athens, the
      great body of the people were in effect excluded from all the trades which
      are now commonly exercised by the lower sort of the inhabitants of towns.
      Such trades were, at Athens and Rome, all occupied by the slaves of the
      rich, who exercised them for the benefit of their masters, whose wealth,
      power, and protection, made it almost impossible for a poor freeman to
      find a market for his work, when it came into competition with that of the
      slaves of the rich. Slaves, however, are very seldom inventive; and all
      the most important improvements, either in machinery, or in the
      arrangement and distribution of work, which facilitate and abridge labour
      have been the discoveries of freemen. Should a slave propose any
      improvement of this kind, his master would be very apt to consider the
      proposal as the suggestion of laziness, and of a desire to save his own
      labour at the master’s expense. The poor slave, instead of reward would
      probably meet with much abuse, perhaps with some punishment. In the
      manufactures carried on by slaves, therefore, more labour must generally
      have been employed to execute the same quantity of work, than in those
      carried on by freemen. The work of the farmer must, upon that account,
      generally have been dearer than that of the latter. The Hungarian mines,
      it is remarked by Mr Montesquieu, though not richer, have always been
      wrought with less expense, and therefore with more profit, than the
      Turkish mines in their neighbourhood. The Turkish mines are wrought by
      slaves; and the arms of those slaves are the only machines which the Turks
      have ever thought of employing. The Hungarian mines are wrought by
      freemen, who employ a great deal of machinery, by which they facilitate
      and abridge their own labour. From the very little that is known about the
      price of manufactures in the times of the Greeks and Romans, it would
      appear that those of the finer sort were excessively dear. Silk sold for
      its weight in gold. It was not, indeed, in those times an European
      manufacture; and as it was all brought from the East Indies, the distance
      of the carriage may in some measure account for the greatness of the
      price. The price, however, which a lady, it is said, would sometimes pay
      for a piece of very fine linen, seems to have been equally extravagant;
      and as linen was always either an European, or at farthest, an Egyptian
      manufacture, this high price can be accounted for only by the great
      expense of the labour which must have been employed about It, and the
      expense of this labour again could arise from nothing but the awkwardness
      of the machinery which is made use of. The price of fine woollens, too,
      though not quite so extravagant, seems, however, to have been much above
      that of the present times. Some cloths, we are told by Pliny {Plin. 1.
      ix.c.39.}, dyed in a particular manner, cost a hundred denarii, or
      £3:6s:8d. the pound weight. Others, dyed in another manner, cost a
      thousand denarii the pound weight, or £33:6s:8d. The Roman pound, it must
      be remembered, contained only twelve of our avoirdupois ounces. This high
      price, indeed, seems to have been principally owing to the dye. But had
      not the cloths themselves been much dearer than any which are made in the
      present times, so very expensive a dye would not probably have been
      bestowed upon them. The disproportion would have been too great between
      the value of the accessory and that of the principal. The price mentioned
      by the same author {Plin. 1. viii.c.48.}, of some triclinaria, a sort of
      woollen pillows or cushions made use of to lean upon as they reclined upon
      their couches at table, passes all credibility; some of them being said to
      have cost more than £30,000, others more than £300,000. This high price,
      too, is not said to have arisen from the dye. In the dress of the people
      of fashion of both sexes, there seems to have been much less variety, it
      is observed by Dr Arbuthnot, in ancient than in modern times; and the
      very little variety which we find in that of the ancient statues, confirms
      his observation. He infers from this, that their dress must, upon the
      whole, have been cheaper than ours; but the conclusion does not seem to
      follow. When the expense of fashionable dress is very great, the variety
      must be very small. But when, by the improvements in the productive powers
      of manufacturing art and industry, the expense of any one dress comes to
      be very moderate, the variety will naturally be very great. The rich, not
      being able to distinguish themselves by the expense of any one dress, will
      naturally endeavour to do so by the multitude and variety of their
      dresses.

      The greatest and most important branch of the commerce of every nation, it
      has already been observed, is that which is carried on between the
      inhabitants of the town and those of the country. The inhabitants of the
      town draw from the country the rude produce, which constitutes both the
      materials of their work and the fund of their subsistence; and they pay
      for this rude produce, by sending back to the country a certain portion of
      it manufactured and prepared for immediate use. The trade which is carried
      on between these two different sets of people, consists ultimately in a
      certain quantity of rude produce exchanged for a certain quantity of
      manufactured produce. The dearer the latter, therefore, the cheaper the
      former; and whatever tends in any country to raise the price of
      manufactured produce, tends to lower that of the rude produce of the land,
      and thereby to discourage agriculture. The smaller the quantity of
      manufactured produce, which any given quantity of rude produce, or, what
      comes to the same thing, which the price of any given quantity of rude
      produce, is capable of purchasing, the smaller the exchangeable value of
      that given quantity of rude produce; the smaller the encouragement which
      either the landlord has to increase its quantity by improving, or the
      farmer by cultivating the land. Whatever, besides, tends to diminish in
      any country the number of artificers and manufacturers, tends to diminish
      the home market, the most important of all markets, for the rude produce
      of the land, and thereby still further to discourage agriculture.

      Those systems, therefore, which preferring agriculture to all other
      employments, in order to promote it, impose restraints upon manufactures
      and foreign trade, act contrary to the very end which they propose, and
      indirectly discourage that very species of industry which they mean to
      promote. They are so far, perhaps, more inconsistent than even the
      mercantile system. That system, by encouraging manufactures and foreign
      trade more than agriculture, turns a certain portion of the capital of the
      society, from supporting a more advantageous, to support a less
      advantageous species of industry. But still it really, and in the end,
      encourages that species of industry which it means to promote. Those
      agricultural systems, on the contrary, really, and in the end, discourage
      their own favourite species of industry.

      It is thus that every system which endeavours, either, by extraordinary
      encouragements to draw towards a particular species of industry a greater
      share of the capital of the society than what would naturally go to it,
      or, by extraordinary restraints, to force from a particular species of
      industry some share of the capital which would otherwise be employed in
      it, is, in reality, subversive of the great purpose which it means to
      promote. It retards, instead of accelerating the progress of the society
      towards real wealth and greatness; and diminishes, instead of increasing,
      the real value of the annual produce of its land and labour.

      All systems, either of preference or of restraint, therefore, being thus
      completely taken away, the obvious and simple system of natural liberty
      establishes itself of its own accord. Every man, as long as he does not
      violate the laws of justice, is left perfectly free to pursue his own
      interest his own way, and to bring both his industry and capital into
      competition with those of any other man, or order of men. The sovereign is
      completely discharged from a duty, in the attempting to perform which he
      must always be exposed to innumerable delusions, and for the proper
      performance of which, no human wisdom or knowledge could ever be
      sufficient; the duty of superintending the industry of private people, and
      of directing it towards the employments most suitable to the interests of
      the society. According to the system of natural liberty, the sovereign has
      only three duties to attend to; three duties of great importance, indeed,
      but plain and intelligible to common understandings: first, the duty of
      protecting the society from the violence and invasion of other independent
      societies; secondly, the duty of protecting, as far as possible, every
      member of the society from the injustice or oppression of every other
      member of it, or the duty of establishing an exact administration of
      justice; and, thirdly, the duty of erecting and maintaining certain public
      works, and certain public institutions, which it can never be for the
      interest of any individual, or small number of individuals to erect and
      maintain; because the profit could never repay the expense to any
      individual, or small number of individuals, though it may frequently do
      much more than repay it to a great society.

      The proper performance of those several duties of the sovereign
      necessarily supposes a certain expense; and this expense again necessarily
      requires a certain revenue to support it. In the following book,
      therefore, I shall endeavour to explain, first, what are the necessary
      expenses of the sovereign or commonwealth; and which of those expenses
      ought to be defrayed by the general contribution of the whole society; and
      which of them, by that of some particular part only, or of some particular
      members of the society: secondly, what are the different methods in which
      the whole society may be made to contribute towards defraying the expenses
      incumbent on the whole society; and what are the principal advantages and
      inconveniencies of each of those methods: and thirdly, what are the
      reasons and causes which have induced almost all modern governments to
      mortgage some part of this revenue, or to contract debts; and what have
      been the effects of those debts upon the real wealth, the annual produce
      of the land and labour of the society. The following book, therefore, will
      naturally be divided into three chapters.










      APPENDIX TO BOOK IV

      The two following accounts are subjoined, in order to illustrate and
      confirm what is said in the fifth chapter of the fourth book, concerning
      the Tonnage Bounty to the Whit-herring Fishery. The reader, I believe, may
      depend upon the accuracy of both accounts.

      An account of Busses fitted out in Scotland for eleven Years, with the
      Number of empty Barrels carried out, and the Number of Barrels of Herrings
      caught; also the Bounty, at a Medium, on each Barrel of Sea-sricks, and on
      each Barrel when fully packed.


  Years   Number of  Empty Barrels  Barrels of Her-  Bounty paid on
           Busses     carried out    rings caught      the Busses
                                                          £.  s.  d.
  1771          29        5,948        2,832          2,885   0   0
  1772         168       41,316       22,237         11,055   7   6
  1773         190       42,333       42,055         12,510   8   6
  1774         240       59,303       56,365         26,932   2   6
  1775         275       69,144       52,879         19,315  15   0
  1776         294       76,329       51,863         21,290   7   6
  1777         240       62,679       43,313         17,592   2   6
  1778         220       56,390       40,958         16,316   2   6
  1779         206       55,194       29,367         15,287   0   0
  1780         181       48,315       19,885         13,445  12   6
  1781         135       33,992       16,593          9,613  15   6

      Totals 2,186      550,943      378,347       £165,463  14   0

  Sea-sticks     378,347  Bounty, at a medium, for each
                          barrel of sea-sticks,         £ 0   8   2¼
                          But a barrel of sea-sticks
                          being only reckoned two thirds
                          of a barrel fully packed, one
                          third to be deducted, which
  ⅓ deducted     126,115  brings the bounty to          £ 0  12   3¾
  Barrels fully
  packed         252,231

  And if the herrings are exported, there is besides a
                                           premium of   £ 0   2   8
  So the bounty paid by government in money for each
                                           barrel is    £ 0  14  11¾

  But if to this, the duty of the salt usually taken
  credit for as expended in curing each barrel, which
  at a medium, is, of foreign, one bushel and one-
  fourth of a bushel, at 10s. a-bushel, be added, viz     0  12   6
  the bounty on each barrel would amount to             £ 1   7   5¾

  If the herrings are cured with British salt, it will
  stand thus, viz.
  Bounty as before                                      £ 0  14  11¾
  But if to this bounty, the duty on two bushels of
  Scotch salt, at 1s.6d. per bushel, supposed to be
  the quantity, at a medium, used in curing each
  barrel is added, viz.                                   0   3   0
  The bounty on each barrel will amount to              £ 0  17  11¾

  And when buss herrings are entered for home
  consumption in Scotland, and pay the shilling a
  barrel of duty, the bounty stands thus, to wit,
                                           as before    £ 0  12   3¾
  From which the shilling a barrel is to be deducted      0   1   0
                                                        £ 0  11   3¾

  But to that there is to be added again, the duty of
  the foreign salt used curing a barrel of herring viz    0  12   6
  So that the premium allowed for each barrel of her-
  rings entered for home consumption is                 £ 1   3   9¾

  If the herrings are cured in British salt, it will
  stand as follows viz.
  Bounty on each barrel brought in by the busses, as
  above                                                 £ 0  12   3¾
  From which deduct 1s. a-barrel, paid at the time
  they are entered for home consumption                   0   1   0
                                                        £ 0  11   3¾

  But if to the bounty, the the duty on two bushel
  of Scotch salt, at 1s.6d. per bushel supposed to
  be the quantity, at a medium, used in curing each
  barrel, is added, viz                                   0   3   0
  the premium for each barrel entered for home
  consumption will be                                   £ 1  14   3¾



      Though the loss of duties upon herrings exported cannot, perhaps, properly
      be considered as bounty, that upon herrings entered for home consumption
      certainly may.

      An account of the Quantity of Foreign Salt imported into Scotland, and of
      Scotch Salt delivered Duty-free from the Works there, for the Fishery,
      from the 5th. of April 1771 to the 5th. of April 1782 with the Medium of
      both for one Year.


                                Foreign Salt      Scotch Salt delivered
           PERIOD                 imported        from the Works
                                  Bushels              Bushels

  From 5th. April 1771 to
      5th. April 1782             936,974              168,226
  Medium for one year              85,159½              15,293¼



      It is to be observed, that the bushel of foreign salt weighs 48lbs., that
      of British weighs 56lbs. only.



BOOK V.
OF THE REVENUE OF THE SOVEREIGN OR COMMONWEALTH


## Extraction Guidelines

---
id: extraction-rules
name: extraction_rules
artifact_type: content
description: Guidelines for extracting economic entities from source text
version: 1.0.0
---

# Entity Extraction Rules

## What Constitutes an Entity

An economic entity is a distinct concept, actor, mechanism, or institution
that plays a functional role in Adam Smith's economic analysis. Extract
entities at the level of specificity where they carry independent meaning.

## Extraction Criteria

1. **Concepts**: Abstract economic ideas (e.g., "division of labour",
   "effectual demand", "natural price"). Extract when Smith defines,
   explains, or argues about the concept.

2. **Actors**: Economic agents with defined roles (e.g., "the labourer",
   "the merchant", "the sovereign"). Extract when the actor performs
   a distinct economic function.

3. **Mechanisms**: Processes or dynamics that produce economic effects
   (e.g., "accumulation of stock", "market price adjustment",
   "foreign trade"). Extract when the mechanism is described as
   producing specific outcomes.

4. **Institutions**: Organised structures that shape economic behaviour
   (e.g., "the corporation", "the guild", "the joint-stock company").
   Extract when the institution's economic function is described.

## Granularity Rules

- Extract at the level of a single coherent concept.
- Do NOT extract synonyms as separate entities — choose the primary term
  Smith uses and note variations.
- DO extract distinct aspects of a broad concept as separate entities when
  Smith treats them independently (e.g., "wages of labour" and "profits
  of stock" are separate from "price of commodities" even though they
  compose it).
- If an entity appears across multiple chapters, extract it on first
  significant appearance and note cross-references in later chapters.

## Naming Conventions

- Use Smith's own terminology where possible.
- Normalise to lowercase except for proper nouns.
- Use the most common form Smith uses (e.g., "division of labour" not
  "divided labour").

## Quality Checks

- Each entity must have a definition that would be comprehensible without
  reading the source chapter.
- Each entity must cite the specific book and chapter of first appearance.
- **Economic Domain** must be EXACTLY ONE of: Production, Distribution,
  Exchange, Consumption, Accumulation, Regulation, or General Theory.
  Do not combine multiple domains. Do not use any other value.
- **Source Chapter format**: Use `Book [Roman numeral], Chapter [number]`
  — for example `Book I, Chapter 3`. Do not include the chapter title,
  quotation marks, markdown formatting, or asterisks. Use Roman numerals
  for the book (I, II, III, IV, V).


## VSM Framework Context

Use the following VSM framework as context to guide your extraction.
Prioritize entities that are likely to have clear mappings to VSM concepts,
but do not exclude entities simply because they lack an obvious mapping.

---
id: vsm-framework
name: vsm_framework
artifact_type: content
description: Stafford Beer's Viable System Model reference for economic analysis
version: 1.0.0
---

# Stafford Beer's Viable System Model (VSM)

The Viable System Model (VSM) is a model of the organisational structure of any
autonomous system capable of producing itself. It was created by management
cybernetician Stafford Beer in his books *Brain of the Firm* (1972) and
*The Heart of Enterprise* (1979).

## Core Principle: Viability

A viable system is any system organised in such a way as to meet the demands
of surviving in a changing environment. One of the prime features of systems
that survive is that they are adaptable. The VSM expresses a model for a
viable system, which is an abstracted cybernetic description applicable to
any organisation that is a going concern.

## The Five Systems

### System 1 (S1) — Operations

The primary activities that produce the organisation's purpose. These are the
operational units that directly create value. Each operational element is itself
a viable system (the principle of recursion).

**In economic terms:** Productive enterprises, factories, farms, workshops,
individual labourers performing specialised tasks, merchant operations.

**Key properties:** Autonomy within constraints, self-organisation,
direct engagement with the environment.

### System 2 (S2) — Coordination

The information channels and bodies that allow the primary activities in
System 1 to communicate with each other and that allow System 3 to monitor
and coordinate activities. System 2 dampens oscillations and resolves
conflicts between operational units.

**In economic terms:** Market price mechanisms, trade customs, standard
weights and measures, commercial law, banking clearinghouses, trade guilds.

**Key properties:** Anti-oscillatory, dampening, scheduling, conflict
resolution, standardisation.

### System 3 (S3) — Control / Operational Management

The structures and controls that establish the rules, resources, rights,
and responsibilities of System 1 and provide an interface between Systems 1
and Systems 4/5. System 3 represents the day-to-day control of the
organisation. It optimises the internal environment.

**In economic terms:** Government regulation of trade, taxation policy, labour
laws, enforcement of contracts, the "invisible hand" as emergent internal
regulation, guilds and corporations governing members.

**Key properties:** Internal regulation, resource allocation, accountability,
synergy extraction, performance management.

### System 3* (S3*) — Audit / Monitoring

The audit and monitoring channel that allows System 3 to verify information
coming from System 1 through channels other than those provided by System 2.
System 3* provides sporadic, direct access to operational reality.

**In economic terms:** Market inspections, quality checks, auditing of accounts,
surprise investigations into trade practices, verification of weights and measures.

**Key properties:** Sporadic direct investigation, reality checking, bypassing
normal reporting channels.

### System 4 (S4) — Intelligence / Adaptation

The bodies and processes that look outward to the environment to monitor
how the organisation needs to adapt to remain viable. System 4 captures
all relevant information about the outside-and-then environment. It is
responsible for strategic responses.

**In economic terms:** Foreign intelligence about trade opportunities,
market research, new technology adoption, colonial exploration and trade
route development, understanding of foreign economic systems.

**Key properties:** Environmental scanning, future orientation, strategic
planning, modelling, research and development.

### System 5 (S5) — Policy / Identity

The policy-making body that balances demands from Systems 3 and 4 and defines
the identity, values, and purpose of the organisation. System 5 provides
closure to the whole system and represents its supreme authority.

**In economic terms:** Sovereign authority, constitutional principles governing
economic policy, national economic identity, the philosophical foundations
of economic systems (mercantilism vs. free trade), the overarching purpose
of the commonwealth.

**Key properties:** Identity, ethos, supreme command, policy closure,
balancing internal and external perspectives.

## Key Concepts

### Recursion

Every viable system contains and is contained in a viable system. The same
five-system structure recurs at every level of organisation. A workshop is
a viable system within a factory, which is a viable system within an
industry, which is a viable system within a national economy.

### Variety

A measure of the number of possible states of a system. The Law of Requisite
Variety (Ashby's Law) states that only variety can absorb variety. A
controller must have at least as much variety as the system it controls.

### Requisite Variety

The principle that for effective regulation, the variety of the regulator
must match the variety of the system being regulated. This is achieved
through variety attenuation (reducing the variety coming up from operations)
and variety amplification (increasing the variety of management's responses).

### Attenuation and Amplification

Variety engineering mechanisms. Attenuation reduces variety (e.g., reporting
summaries, statistical aggregation, standardisation). Amplification increases
variety (e.g., delegation, empowerment, decentralisation).

### Algedonic Signals

Emergency signals that bypass the normal management hierarchy to alert
higher systems of critical situations requiring immediate attention. Named
from the Greek words for pain (algos) and pleasure (hedone).

**In economic terms:** Market panics, famine signals, sudden price collapses,
trade embargoes, economic crises that demand immediate sovereign intervention.

### Autonomy

The degree of freedom granted to operational units (System 1) to self-organise
within constraints set by System 3. Beer argued that maximum autonomy
consistent with systemic cohesion yields maximum viability.

### Viability

The capacity of a system to maintain a separate existence and survive in a
changing environment. A viable system continuously adapts while maintaining
its identity.


## Existing Entities

The following entities have already been extracted from previous chapters
of this work. Do NOT re-extract any of these. If one of these entities
appears in the current chapter, you may omit it entirely — the infospace
already contains it. Only extract entities that are genuinely new.

- accumulation-of-stock
- active-and-productive-stock
- adulteration-of-metals
- adulterine-guilds
- advanced-state-of-society
- advancing-state-of-manufacture
- agio-of-bank-money
- agricultural-capital
- agricultural-capital-structure
- agricultural-comparative-advantage
- agricultural-cultivation
- agricultural-cultivation-at-farmer-expense
- agricultural-cultivation-at-proprietor-expense
- agricultural-demand
- agricultural-development-constraints
- agricultural-development-sequence
- agricultural-economic-potential
- agricultural-efficiency
- agricultural-improvement
- agricultural-improvement-discouragement
- agricultural-improvement-foundation
- agricultural-labour
- agricultural-market-access-cost-structure
- agricultural-market-access-development-prerequisites
- agricultural-market-access-development-sequence
- agricultural-market-access-gradient
- agricultural-market-access-inequality
- agricultural-market-access-opportunity-cost
- agricultural-market-communication-channels
- agricultural-market-integration
- agricultural-market-size-threshold
- agricultural-opportunity-cost
- agricultural-price-ceilings
- agricultural-price-differential
- agricultural-price-discovery
- agricultural-price-discrimination
- agricultural-price-elasticity
- agricultural-price-equalization
- agricultural-price-floors
- agricultural-price-mechanism
- agricultural-price-regulation
- agricultural-price-stability
- agricultural-price-transmission
- agricultural-price-volatility
- agricultural-productivity
- agricultural-productivity-limits
- agricultural-security-gradient
- agricultural-spatial-inequality
- agricultural-specialization
- agricultural-stock
- agricultural-supply
- agricultural-surplus
- agricultural-surplus-determination
- agricultural-technology
- agricultural-technology-adoption
- agricultural-trade
- alien-merchant-duties
- ancient-system-of-political-economy
- annual-coinage-expense-justification
- annual-consumption-of-goods
- annual-consumption-of-metals
- annual-importation-of-gold-and-silver-purposes
- annual-industry-employed-in-production
- annual-plate-addition-estimation
- annual-produce-of-land-and-labour
- annual-surplus-of-gold-in-portugal
- apprenticeships
- artificer-neighbourhood-settlement
- artificer-planter-independence
- artificer-planter-transition
- artificer-servant-status
- artificers-and-retailers
- artificial-direction-of-industry
- artificial-grasses
- artificial-market-creation
- artisan-specialisation
- assaying
- assize-of-bread
- assize-of-bread-and-ale
- aulnagers
- average-price-of-corn
- balance-of-produce-and-consumption
- balance-of-trade
- balance-of-trade-doctrine
- bank-capital-adequacy
- bank-capital-structure
- bank-circulation-limits
- bank-competition-effects
- bank-credit-allocation
- bank-credit-cycles
- bank-credit-extension
- bank-credit-quality
- bank-economic-contribution
- bank-economic-contribution-metrics
- bank-economic-cycles
- bank-economic-development
- bank-economic-development-metrics
- bank-economic-efficiency
- bank-economic-efficiency-factors
- bank-economic-efficiency-metrics
- bank-economic-growth
- bank-economic-resilience
- bank-economic-resilience-factors
- bank-economic-resilience-metrics
- bank-economic-stability
- bank-failure-mechanisms
- bank-financial-development
- bank-financial-innovation
- bank-financial-innovation-adoption
- bank-financial-innovation-diffusion
- bank-financial-innovation-factors
- bank-financial-innovation-impact
- bank-financial-innovation-metrics
- bank-financial-intermediation
- bank-financial-intermediation-efficiency
- bank-financial-stability
- bank-financial-stability-factors
- bank-financial-stability-metrics
- bank-financial-system-integration
- bank-financial-system-stability
- bank-information-asymmetry
- bank-interest-rate-determination
- bank-liquidity-management
- bank-market-discipline
- bank-market-structure
- bank-monetary-policy
- bank-monetary-stability
- bank-money
- bank-notes
- bank-of-england-coinage-burden
- bank-operational-efficiency
- bank-operational-risk
- bank-public-utility
- bank-regulatory-compliance
- bank-regulatory-effectiveness
- bank-regulatory-evolution
- bank-regulatory-framework
- bank-regulatory-framework-evolution
- bank-reserves
- bank-risk-management
- bank-systemic-risk
- bank-systemic-risk-management
- bank-systemic-stability
- bank-transaction-costs
- barbarous-nations-barrier
- barter-and-exchange
- benevolence
- bills-of-exchange
- bleacher
- boat-fishery
- bounties-on-exportation
- bounty
- bullion
- bullion-market-price-mechanism
- bullion-transportation-cost-advantage
- buss-fishery
- butcher-trade
- bye-laws
- canal-communication
- capital
- capital-accumulation
- capital-accumulation-through-frugality
- capital-decay-through-excessive-consumption
- capital-employed
- capital-employment-advantages
- capital-employment-effects
- capital-employment-security-gradient
- capital-of-the-farmer
- capital-replacement
- capital-security-preference
- capital-security-visibility
- carriage-value-savings
- carrying-trade
- cash-accounts
- certificates
- cheap-years
- circulating-capital
- circulating-capital-components
- circulating-money
- circulation-of-money
- civil-government-expense-in-colonies
- coal-heaver
- coal-price
- coarser-and-finer-materials
- coin-degradation-measurement
- coined-money
- collier
- colonial-administrative-efficiency
- colonial-dependency-structure
- colonial-economic-adaptation
- colonial-economic-autonomy
- colonial-economic-autonomy-benefits
- colonial-economic-comparative-advantage
- colonial-economic-development-constraints
- colonial-economic-development-sequence
- colonial-economic-diversification
- colonial-economic-efficiency-analysis
- colonial-economic-freedom
- colonial-economic-growth-patterns
- colonial-economic-integration
- colonial-economic-interdependence
- colonial-economic-justice
- colonial-economic-opportunity-costs
- colonial-economic-policy-alternatives
- colonial-economic-policy-effectiveness
- colonial-economic-potential
- colonial-economic-specialization
- colonial-economic-stability
- colonial-economic-system
- colonial-economic-system-adaptation-mechanisms
- colonial-economic-system-balance
- colonial-economic-system-comparison
- colonial-economic-system-coordination
- colonial-economic-system-design
- colonial-economic-system-dynamics
- colonial-economic-system-equilibrium
- colonial-economic-system-evaluation
- colonial-economic-system-evolution
- colonial-economic-system-feedback-loops
- colonial-economic-system-governance
- colonial-economic-system-implementation
- colonial-economic-system-innovation
- colonial-economic-system-learning
- colonial-economic-system-objectives
- colonial-economic-system-outcomes
- colonial-economic-system-performance
- colonial-economic-system-principles
- colonial-economic-system-resilience
- colonial-economic-system-stability-mechanisms
- colonial-economic-system-sustainability
- colonial-economic-system-transformation
- colonial-labor-market-dynamics
- colonial-land-abundance-effects
- colonial-market-access-costs
- colonial-market-expansion
- colonial-military-burden
- colonial-population-growth-factors
- colonial-prosperity-mechanisms
- colonial-revenue-potential
- colonial-trade-monopoly
- colonial-trade-pattern-distortion
- colonial-wine-duty-drawback
- colony-assemblies
- colony-prosperity
- colony-trade-monopoly
- combination-of-masters
- combination-of-workmen
- command-over-labour
- commerce-between-town-and-country
- commerce-of-towns
- commercial-country-ruin-predictions
- commercial-development-sequence-inversion
- commercial-discord-source
- commercial-family-duration-pattern
- commercial-hospitality-contrast
- commercial-independence-effect
- commercial-interactions
- commercial-jealousy-mechanism
- commercial-maxims-inversion
- commercial-or-mercantile-system
- commercial-order-and-government-introduction
- commercial-policy-of-england
- commercial-regulations
- commercial-society
- commercial-society-emergence
- commercial-society-formation
- commercial-system-enrichment-mechanism
- commercial-system-principles
- commercial-system-transformation
- commercial-transactions
- common-annual-profits-of-manufacturing-stock
- common-labour-wages
- common-returns-of-stock
- commonalty
- comparative-advantage-principle
- competition-among-buyers
- competition-among-dealers
- competition-among-sellers
- complete-manufacture
- component-parts-of-price
- computed-exchange-rate
- consumption-as-the-end-of-production
- consumption-of-foreign-goods
- contract
- conversion-price
- copper-money
- corn-exportation-prohibition
- corn-land
- corn-rent
- corporation-laws
- corporation-privileges-and-market-prices
- country-gentlemen
- country-gentlemen-versus-merchants
- country-life-charms
- cultivation-improvement-priority
- dead-stock
- dear-years
- debasement-of-currency
- declining-manufacture
- degradation-of-coin
- degradation-of-silver
- demand-for-labour
- demesne
- diamond-buckles-metaphor
- direct-foreign-trade-of-consumption
- disadvantageous-balance-trade-restraints
- discount-of-bills
- distant-country-subsistence
- distant-market-manufacturing
- distant-sale-manufacturing
- division-of-labour
- division-of-labour-advantage
- domestic-industry-protection
- domestic-market-monopoly
- domestic-market-size-effects
- double-coincidence-of-wants
- drawback
- drawbacks
- drawing-and-redrawing
- duties-on-importation
- dwelling-house-distinction
- early-and-rude-state-of-society
- early-navigation-advantages
- economic-accessibility-determinants
- economic-accessibility-gradient
- economic-autonomy
- economic-autonomy-gradient
- economic-backwardness
- economic-connectivity-importance
- economic-development-constraints
- economic-development-geography
- economic-development-geography-theory
- economic-development-sequence
- economic-development-sequencing
- economic-development-spatial-patterns
- economic-geography
- economic-geography-determinism
- economic-geography-impact
- economic-identity
- economic-isolation-effects
- economic-opportunity-cost
- economic-opportunity-geography
- economic-prosperity-symptoms
- economic-spatial-inequality
- economic-spatial-organisation
- economic-spatial-organization
- economic-stagnation-symptoms
- economic-system-actor
- economic-system-adaptability
- economic-system-adaptation
- economic-system-adoption-factor
- economic-system-analysis
- economic-system-application
- economic-system-benchmark
- economic-system-best-practice
- economic-system-best-practices
- economic-system-change-agent
- economic-system-comparison
- economic-system-comprehension
- economic-system-consequence
- economic-system-context
- economic-system-coordination
- economic-system-development
- economic-system-diffusion-mechanism
- economic-system-diffusion-mechanisms
- economic-system-effectiveness
- economic-system-effectiveness-evaluation
- economic-system-efficiency
- economic-system-evaluation
- economic-system-evaluation-criteria
- economic-system-evolution
- economic-system-experience-accumulation
- economic-system-explanation
- economic-system-failure-indicator
- economic-system-framework
- economic-system-function
- economic-system-governance
- economic-system-implementation
- economic-system-implementation-barrier
- economic-system-improvement
- economic-system-influence
- economic-system-innovation
- economic-system-innovation-driver
- economic-system-institution
- economic-system-integration
- economic-system-interaction
- economic-system-knowledge
- economic-system-knowledge-transfer
- economic-system-learning-process
- economic-system-legitimacy
- economic-system-management
- economic-system-mechanism
- economic-system-mechanisms
- economic-system-objectives
- economic-system-operation
- economic-system-outcome-measure
- economic-system-outcomes
- economic-system-performance-indicator
- economic-system-policy
- economic-system-practice
- economic-system-principles
- economic-system-purpose
- economic-system-relationship
- economic-system-resistance-factor
- economic-system-resistance-factors
- economic-system-selection
- economic-system-standard
- economic-system-structure
- economic-system-success-measure
- economic-system-sustainability
- economic-system-theory
- economic-system-transformation
- economic-system-transition-challenge
- economic-system-transition-challenges
- economic-systems-distinction
- effect-of-prohibition-on-gold-and-silver-export
- effectual-demand
- ejectment-action
- encroachment-upon-capital
- engrossers-and-forestallers
- engrossing
- entail
- enumerated-commodities
- environmental-scanning
- equal-profit-employment-choice
- exchange
- exchange-rate-mechanism
- exchangeable-value
- exchequer
- excise-duty-drawback
- exclusive-company
- exclusive-corporation
- export-bounty
- export-of-gold-and-silver-prohibition-effects
- exportation-bounty
- exportation-of-gold-and-silver-as-effect-of-declension
- exportation-trade
- extraordinary-expense
- extraordinary-profits
- extraordinary-profits-analysis
- extraordinary-restraints-on-importation
- fairs-and-markets
- false-coiners-and-seignorage
- farm-rent
- farmer
- farmers-capital
- farmers-profit
- favour
- feudal-anarchy
- feudal-government-effects
- fixed-capital
- flax-grower
- fluctuations-in-value-of-gold-and-silver
- forced-corn-trade
- foreign-capital-exportation
- foreign-commerce-manufactures-birth
- foreign-commodities
- foreign-corn-importation-effects
- foreign-manufacture-prohibitions
- foreign-market
- foreign-market-access
- foreign-sale-encouragement
- foreign-trade
- foreign-trade-enrichment-mechanism
- foreign-trade-of-consumption
- forestalling
- four-methods-of-employing-capital
- fraud-in-drawback-system
- free-burgh
- free-ports
- free-trade
- freeholder-yeomanry
- french-goods-export-restrictions
- frozen-ocean-barrier
- frugal-and-industrious-borrowers
- frugality-versus-prodigality
- fruit-garden
- fruit-wall
- funds-for-maintaining-labour
- funds-for-maintaining-productive-labour
- funds-for-maintaining-unproductive-hands
- gold-and-silver-as-measure-of-value
- gold-money
- gold-price-variation
- gradual-restoration-of-trade-freedom
- graziers-versus-manufacturers-interests
- gross-revenue
- hanseatic-league
- higgling-and-bargaining-of-the-market
- home-made-commodities
- home-market
- home-market-monopoly
- home-trade
- hop-garden
- human-folly-injustice-exposure
- human-nature
- idle-consumers
- immediate-consumption
- import-restraint
- importation-trade
- improved-farm-advantages
- improved-land
- improvement-of-the-country
- inclosure
- increase-of-money-as-effect-of-prosperity
- inland-corn-dealer
- inland-duty-drawback
- inland-market-limitation
- inland-navigation-extent
- inland-parts-of-the-country
- inland-trade
- inn-or-tavern-keeper
- instruments-of-husbandry
- interest
- interest-of-money
- interest-or-use-of-money
- invisible-hand-mechanism
- joint-stock-company
- journeymen
- judgment-in-labour-application
- kelp
- kitchen-garden
- labour-of-inspection-and-direction
- labouring-cattle
- labouring-poor
- land-carriage
- land-mines-and-fisheries
- land-monopolization-effects
- landlord
- landlords-share
- law-of-primogeniture
- legal-rate-of-interest
- legal-tender
- licence-to-gather-natural-produce
- lowest-rate-of-wages
- machinery-invention
- madeira-wine-trade-exception
- manufactured-produce
- manufacturer
- manufacturers-monopoly-power
- manufacturing-capital
- manufacturing-process-subdivision
- manufacturing-subdivision
- maritime-commerce-development
- maritime-employment
- market-access-cost-structure
- market-access-development-sequence
- market-access-economic-potential
- market-access-gradient
- market-access-inequality
- market-access-opportunity-cost
- market-based-economic-geography
- market-based-economic-identity
- market-based-economic-structure
- market-based-productivity-limits
- market-based-specialisation
- market-communication-channels
- market-demand-regulation
- market-development-prerequisites
- market-driven-division
- market-extent
- market-extent-advantageousness
- market-extent-economic-impact
- market-extent-measurement
- market-for-surplus-produce
- market-integration-barriers
- market-integration-potential
- market-integration-timeline
- market-obstruction
- market-price-adjustment
- market-price-adjustment-mechanism
- market-price-mechanism
- market-price-mechanism-for-rude-produce
- market-price-mechanism-regulation
- market-price-of-bullion
- market-price-of-commodities
- market-price-of-things
- market-price-regulation-mechanism
- market-proximity-advantage
- market-rate-of-interest
- market-regulation-of-prices
- market-separation
- market-size-economies
- market-size-specialisation-threshold
- market-size-specialization
- market-size-threshold
- market-size-threshold-effects
- market-town-economy
- market-town-formation
- masquerade-dress-trade
- master-artificer
- master-manufacturer
- materials-and-subsistence
- measure-of-exchangeable-value
- mediterranean-civilisation-pattern
- melting-pot-effects
- menial-servants
- mercantile-jealousy
- mercantile-system
- mercantile-system-principles
- merchant
- merchant-capital
- merchant-capital-employment-choices
- merchant-carrier
- merchant-country-gentleman-transition
- merchantable-herrings
- metal-currency
- metayer
- military-assistance
- military-defense-expense
- military-discipline
- military-employment
- mine-fertility
- mine-situation
- mint
- mint-price
- mint-price-versus-market-price-relationship
- modern-states-inversion
- modern-system-of-political-economy
- modes-of-expense-affecting-public-opulence
- money
- money-as-instrument-of-commerce
- money-price-of-corn
- money-price-of-labour
- money-rent
- moneys-worth
- monied-interest
- monopoly-effects-on-market-price
- monopoly-effects-on-prices
- monopoly-in-trade
- monopoly-of-sugar-trade
- monopoly-of-tobacco-trade
- monopoly-of-trade
- monopoly-price-of-land
- mutual-gain-reciprocity
- mutual-good-offices
- mutual-servitude
- national-animosity-in-commerce
- national-animosity-in-trade-policy
- national-capital-composition
- national-economic-identity
- national-enrichment-through-neighbours-wealth
- national-prejudice-and-animosity-in-trade
- national-prejudice-in-trade
- natural-advantages-in-trade
- natural-balance-of-employments
- natural-complement-of-riches
- natural-course-of-capital-employment
- natural-course-of-economic-development
- natural-course-of-things
- natural-development-sequence
- natural-division-of-labour
- natural-employment-of-capital
- natural-inclinations-thwarting
- natural-liberty-in-banking
- natural-liberty-in-colonial-trade
- natural-liberty-in-trade
- natural-liberty-of-trade
- natural-market-advantages
- natural-order-inversion
- natural-order-of-economic-development
- natural-preference-cultivation
- natural-price-as-central-price
- natural-price-of-commodities
- natural-produce-of-land
- natural-progress-of-improvement
- natural-rates-of-wages-profit-and-rent
- natural-rent-of-land
- natural-state-of-employments
- navigable-rivers
- navigation-acts
- neat-revenue
- necessity
- nominal-measure-of-value
- nominal-price
- nominal-price-of-commodities
- non-enumerated-commodities
- non-standard-metal
- occasional-and-temporary-market-fluctuations
- old-subsidy-drawback-rules
- ordinary-market-price-of-land
- ordinary-profits-of-stock
- ordinary-rates-of-wages-profit-and-rent
- ordinary-state-of-employments
- original-destination-of-man
- original-government-manners
- overstocked-market-conditions
- packet-boat-gold-import-estimate
- paper-money
- pasture-land
- payment-in-kind
- penelopes-web-metaphor
- perfect-liberty-in-trade
- permanent-market-price-enhancements
- permanent-versus-temporary-price-effects
- perpetual-fund-for-maintenance-of-labour
- piece-work-wages
- pin-maker-trade
- planter-independence
- plate-household-silver
- poacher
- policy-closure
- policy-closure-concept
- political-arithmetic
- political-economy
- political-economy-objectives
- poll-tax
- poll-tax-compensation
- potato-cultivation
- precious-metals-consumption
- present-state-of-the-nation-analysis
- price-in-labour
- price-in-money
- price-of-commodities
- prime-cost-of-commodities
- principal-clerk
- principal-employments
- private-interest-monopoly-spirit
- private-misconduct-versus-public-prodigality
- prodigals
- prodigals-and-projectors
- producer-interest-versus-consumer-interest
- productive-abilities
- productive-and-unproductive-labour
- productive-labourers
- productive-powers-of-labour
- profits-of-stock
- progress-of-opulence
- progressive-state-of-society
- progressive-wealth-consequentiality
- prohibition-of-exportation
- prohibition-of-importation
- promissory-notes
- proportion-between-metals
- proportion-between-productive-and-unproductive-hands
- prudent-family-maxim
- public-education-of-professionals
- public-executioner
- public-fiars
- public-generosity-in-coinage
- public-good-versus-private-interest
- public-law-on-coinage
- public-lottery
- public-mourning-effects
- public-registers-of-manufactures
- public-revenue
- public-services-funding
- public-tranquillity
- purveyance
- quantity-of-labour
- rate-of-interest
- rate-of-profit
- re-exportation-drawback
- real-exchange-rate
- real-measure-of-value
- real-price
- real-price-of-commodities
- real-value-of-corn-rent
- real-value-of-silver
- regulated-proportion
- religious-occupational-restrictions
- rent-of-land
- requisite-variety
- requisite-variety-in-banking
- restraints-upon-importation
- retail-trade
- retailers
- retainers-and-dependents-system
- retaliation-in-trade-policy
- revenue
- revenue-constituting-profit-and-rent
- revenue-destined-for-capital-replacement
- revenue-for-public-services
- revenue-or-subsistence-for-the-people
- revenue-versus-capital-effects
- rice-countries
- river-navigation-infrastructure
- round-about-foreign-trade-of-consumption
- rude-produce
- rural-urban-reciprocity
- scarcity-of-hands
- sea-coast-development
- sea-sticks
- security-preference-capital
- seed-as-fixed-capital
- seed-time-and-harvest-metaphor
- seignorage
- self-love
- servile-condition
- settlement-laws
- silver-money
- silver-price-variation
- skill-and-dexterity
- smuggling
- smuggling-as-principal-import-method
- smuggling-of-precious-metals
- smuggling-trade
- sober-people
- societys-general-stock
- sovereign-economic-policy-authority
- sovereign-parsimony
- sovereign-parsimony-principle
- spare-revenue
- specie
- specie-export-prohibition-effects
- species-of-industry-with-consistent-output
- species-of-industry-with-variable-output
- speculative-trade
- stamp-masters
- standard-metal
- standard-weight-of-coin
- state-or-commonwealth-revenue
- stationary-country
- statute-of-labourers
- statutes-of-apprenticeship-effects
- sterling-mark
- stock
- stock-lent-at-interest
- stock-of-the-country
- stock-of-the-farmer
- strategic-planning
- subsistence
- subsistence-agriculture
- subsistence-industry-priority
- subsistence-necessity-priority
- subsistence-of-the-dealer
- subsistence-prioritization
- sugar-colonies
- superfluity
- superior-hardship-and-superior-skill
- surplus-produce
- system-of-agriculture
- system-of-commerce
- systemic-stability
- systemic-stability-analysis
- taille
- tale
- tale-versus-weight-measurement
- temporary-price-of-corn
- temporary-statutes
- temporary-versus-permanent-price-effects
- territorial-cultivation-completeness
- territorial-cultivation-limit
- territorial-improvement-support
- territorial-support-limitation
- three-original-sources-of-revenue
- three-way-employment-of-stock
- thriving-country
- tobacco-colonies
- toil-and-trouble-of-acquiring
- tonnage-bounty
- town-country-dependency
- town-market-function
- town-reproduction-impossibility
- trade-as-union-and-friendship
- trade-balance-mechanism
- trade-capital
- trade-encouragement
- trade-route-dependency
- transportation-cost-differential
- transportation-infrastructure-importance
- transportation-mode-economic-effects
- treasure-accumulation
- treasure-trove
- treaties-of-commerce
- treaty
- truck
- two-branches-of-circulation
- uncultivated-land-availability
- underling-tradesmen-maxims
- unimproved-land
- universal-instruments-of-commerce
- university-of-trades
- unproductive-labourers
- unstamped-bars
- urban-autonomy
- urban-rural-reciprocity
- usury
- value-in-exchange
- value-in-use
- value-of-gold
- value-of-silver
- variety-of-talents
- venison
- victuals
- villeinage
- vineyard
- wages-of-a-journeyman
- wages-of-labour
- waggon-way-through-the-air-metaphor
- warehouse-export-system
- warehouse-rent-for-bullion-deposits
- warehouse-system
- water-carriage
- water-pond-metaphor
- weighing
- whole-produce-of-labour
- wholesale-merchants
- wholesale-trade
- wood-price
- wool-grower

## Instructions

1. Read the source chapter carefully.
2. Review the list of existing entities above and do not duplicate them.
3. Identify all distinct economic concepts, actors, mechanisms, and institutions
   that are NOT already in the existing entities list.
4. For each new entity, produce a separate markdown document following the
   Economic Entity Schema v1.0.
5. Each entity document must include:
   - An H1 heading with the entity name
   - A Definition section (20-150 words)
   - A Source Chapter section citing the specific chapter
   - A Context section describing where in the argument the entity appears
   - An Economic Domain section classifying the entity
6. Optionally include Smith's Original Wording (direct quote) and
   Modern Interpretation sections.
7. Use neutral, analytical language throughout.
8. Ensure each entity is distinct and self-contained.

## Output Format

Output each entity as a separate markdown document, delimited by
`--- ENTITY: <entity-name> ---` markers.

Use **H2 headings** (`##`) for each section inside the entity document.
Do NOT use inline `Section:` format or H3 headings.

Example of a correctly formatted entity:

```
--- ENTITY: division of labour ---

# Division of Labour

## Definition

The separation of a work process into distinct tasks performed by specialised
workers, increasing productivity through greater dexterity, saved time, and
the invention of labour-saving machinery.

## Source Chapter

Book I, Chapter 1

## Context

The opening chapter's central argument, illustrated by Smith's pin factory
example showing how dividing 18 operations dramatically increases output.

## Economic Domain

Production

---
```
