Political Economy [30]
longer exist. Such revolutions in the market are difficult to know with precision, difficult to calculate; and their obscurity is greater for each individual producer, because he but imperfectly knows the number and means of his rivals, the merchants, who are to sell in competition with him. But one single observation serves him, instead of all them: he compares his price with that of the buyer, and this comparison, according to the profit or loss which it offers him, is a warning to increase or diminish his production, for the following year. The producer establishes his price according to what the merchandise has cost, including his profit, which ought to be proportional to what might be obtained in any other kind of industry. The price must be sufficient to repay the workmen's wages, the rent of the land, or the interest on the fixed capitals employed in production, the raw materials wrought by him, with all the expenses of transport, and all the advances of money. When all these reimbursements, calculated at the mean rate of the country, are themselves repaid by the last purchaser, the production may continue on the same footing. If the profits rise above the mean rate, the producer will extend his enterprizes; he will employ new hands and fresh capital, and, striving to benefit by this extraordinary profit, he will soon reduce it to the common level. If the buyer, on the other hand, pays a price too low for compensating all the producer's reimbursements, the latter will, of course, seek to reduce his production, but this change will not be so easy as the other. The workmen employed by him, rather than abandon what gains their bread, consent to work at a lower price; for less even than the necessaries of life. Fixed capitals, moreover, cannot be put to another use; he will content himself with a smaller profit, and continue to work with them till they produce next to nothing. Lastly, the manufacturer himself must live by his industry, and never willingly abandons it: he is ever disposed to attribute the decline of his last year's trade to accidental causes; and the less he has gained, the less is he willing to retire from business. Thus production continues almost always longer than demand, unless the manufacturer has, of his own accord, renounced his business to attempt a new one. The buyer's price, an the other hand, is fixed by competition. He does not inquire what the article costs, but what are the terms on which he may obtain another to serve in its stead; he addresses himself to various merchants, who offer him the same commodity, and bargains with him who will sell the cheapest; or else he considers which will suit him best, among several articles of a different nature, but capable of being substituted for each other. As each is occupied solely with his own private interest, each tends to the same object: all the buyers, on one hand, all the sellers on the other, act as if in concert: the sums asked, and the sums offered, are brought to an equilibrium, and the mean price is established. The seller's price should enable him to reproduce the article sold, with a profit, under the same condition, in the same place. His market, therefore, extends to every country where the mean price established by commerce is no smaller than his. His production is not limited by the consumption of neighbors or countrymen; it is regulated by the whole number of those who, whatever country they inhabit, find an advantage in purchasing his goods, or for whom his producing price is not superior to the buying price. It is this which properly constitutes the extent of market. As the division of labour incessantly augments its productive powers, and the increase of capitals daily obliges the merchant to seek new employment for industry, and try new manufactures, the producer feels no interest more pressing than that of extending his market. If he cannot find new places of sale, it will neither suit him to enlarge his manufactory, when his capital has been increased by saving, nor to improve his fabrication by performing