2000 lines
98 KiB
Markdown
2000 lines
98 KiB
Markdown
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# Extract Economic Entities
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You are an analytical economist specializing in classical economic theory.
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Your task is to extract distinct economic entities from a chapter of
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Adam Smith's *The Wealth of Nations*.
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## Source Chapter
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---
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id: book-4-chapter-03
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title: "OF THE EXTRAORDINARY RESTRAINTS UPON THE IMPORTATION OF GOODS OF ALMOST ALL KINDS, FROM THOSE COUNTRIES WITH WHICH THE BALANCE IS SUPPOSED TO BE DISADVANTAGEOUS."
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book: "4"
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chapter: 3
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artifact_type: content
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---
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CHAPTER III.
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OF THE EXTRAORDINARY RESTRAINTS UPON
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THE IMPORTATION OF GOODS OF ALMOST ALL KINDS, FROM THOSE COUNTRIES WITH WHICH
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THE BALANCE IS SUPPOSED TO BE DISADVANTAGEOUS.
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Part I—Of the Unreasonableness of those Restraints, even upon the
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Principles of the Commercial System.
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To lay extraordinary restraints upon the importation of goods of almost
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all kinds, from those particular countries with which the balance of trade
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is supposed to be disadvantageous, is the second expedient by which the
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commercial system proposes to increase the quantity of gold and silver.
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Thus, in Great Britain, Silesia lawns may be imported for home
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consumption, upon paying certain duties; but French cambrics and lawns are
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prohibited to be imported, except into the port of London, there to be
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warehoused for exportation. Higher duties are imposed upon the wines of
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France than upon those of Portugal, or indeed of any other country. By
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what is called the impost 1692, a duty of five and-twenty per cent. of the
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rate or value, was laid upon all French goods; while the goods of other
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nations were, the greater part of them, subjected to much lighter duties,
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seldom exceeding five per cent. The wine, brandy, salt, and vinegar of
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France, were indeed excepted; these commodities being subjected to other
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heavy duties, either by other laws, or by particular clauses of the same
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law. In 1696, a second duty of twenty-five per cent. the first not having
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been thought a sufficient discouragement, was imposed upon all French
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goods, except brandy; together with a new duty of five-and-twenty pounds
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upon the ton of French wine, and another of fifteen pounds upon the ton of
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French vinegar. French goods have never been omitted in any of those
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general subsidies or duties of five per cent. which have been imposed upon
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all, or the greater part, of the goods enumerated in the book of rates. If
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we count the one-third and two-third subsidies as making a complete
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subsidy between them, there have been five of these general subsidies; so
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that, before the commencement of the present war, seventy-five per cent.
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may be considered as the lowest duty to which the greater part of the
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goods of the growth, produce, or manufacture of France, were liable. But
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upon the greater part of goods, those duties are equivalent to a
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prohibition. The French, in their turn, have, I believe, treated our goods
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and manufactures just as hardly; though I am not so well acquainted with
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the particular hardships which they have imposed upon them. Those mutual
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restraints have put an end to almost all fair commerce between the two
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nations; and smugglers are now the principal importers, either of British
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goods into France, or of French goods into Great Britain. The principles
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which I have been examining, in the foregoing chapter, took their origin
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from private interest and the spirit of monopoly; those which I am going
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te examine in this, from national prejudice and animosity. They are,
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accordingly, as might well be expected, still more unreasonable. They are
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so, even upon the principles of the commercial system.
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First, Though it were certain that in the case of a free trade between
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France and England, for example, the balance would be in favour of France,
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it would by no means follow that such a trade would be disadvantageous to
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England, or that the general balance of its whole trade would thereby be
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turned more against it. If the wines of France are better and cheaper than
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those of Portugal, or its linens than those of Germany, it would be more
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advantageous for Great Britain to purchase both the wine and the foreign
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linen which it had occasion for of France, than of Portugal and Germany.
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Though the value of the annual importations from France would thereby be
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greatly augmented, the value of the whole annual importations would be
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diminished, in proportion as the French goods of the same quality were
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cheaper than those of the other two countries. This would be the case,
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even upon the supposition that the whole French goods imported were to be
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consumed in Great Britain.
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But, Secondly, A great part of them might be re-exported to other
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countries, where, being sold with profit, they might bring back a return,
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equal in value, perhaps, to the prime cost of the whole French goods
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imported. What has frequently been said of the East India trade, might
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possibly be true of the French; that though the greater part of East India
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goods were bought with gold and silver, the re-exportation of a part of
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them to other countries brought back more gold and silver to that which
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carried on the trade, than the prime cost of the whole amounted to. One of
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the most important branches of the Dutch trade at present, consists in the
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carriage of French goods to other European countries. Some part even of
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the French wine drank in Great Britain, is clandestinely imported from
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Holland and Zealand. If there was either a free trade between France and
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England, or if French goods could be imported upon paying only the same
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duties as those of other European nations, to be drawn back upon
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exportation, England might have some share of a trade which is found so
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advantageous to Holland.
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Thirdly, and lastly, There is no certain criterion by which we can
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determine on which side what is called the balance between any two
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countries lies, or which of them exports to the greatest value. National
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prejudice and animosity, prompted always by the private interest of
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particular traders, are the principles which generally direct our judgment
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upon all questions concerning it. There are two criterions, however, which
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have frequently been appealed to upon such occasions, the custom-house
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books and the course of exchange. The custom-house books, I think, it is
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now generally acknowledged, are a very uncertain criterion, on account of
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the inaccuracy of the valuation at which the greater part of goods are
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rated in them. The course of exchange is, perhaps, almost equally so.
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When the exchange between two places, such as London and Paris, is at par,
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it is said to be a sign that the debts due from London to Paris are
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compensated by those due from Paris to London. On the contrary, when a
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premium is paid at London for a bill upon Paris, it is said to be a sign
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that the debts due from London to Paris are not compensated by those due
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from Paris to London, but that a balance in money must be sent out from
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the latter place; for the risk, trouble, and expense, of exporting which,
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the premium is both demanded and given. But the ordinary state of debt and
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credit between those two cities must necessarily be regulated, it is said,
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by the ordinary course of their dealings with one another. When neither of
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them imports from from other to a greater amount than it exports to that
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other, the debts and credits of each may compensate one another. But when
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one of them imports from the other to a greater value than it exports to
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that other, the former necessarily becomes indebted to the latter in a
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greater sum than the latter becomes indebted to it: the debts and credits
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of each do not compensate one another, and money must be sent out from
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that place of which the debts overbalance the credits. The ordinary course
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of exchange, therefore, being an indication of the ordinary state of debt
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and credit between two places, must likewise be an indication of the
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ordinary course of their exports and imports, as these necessarily
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regulate that state.
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But though the ordinary course of exchange shall be allowed to be a
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sufficient indication of the ordinary state of debt and credit between any
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two places, it would not from thence follow, that the balance of trade was
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in favour of that place which had the ordinary state of debt and credit in
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its favour. The ordinary state of debt and credit between any two places
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is not always entirely regulated by the ordinary course of their dealings
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with one another, but is often influenced by that of the dealings of
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either with many other places. If it is usual, for example, for the
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merchants of England to pay for the goods which they buy of Hamburg,
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Dantzic, Riga, etc. by bills upon Holland, the ordinary state of debt and
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credit between England and Holland will not be regulated entirely by the
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ordinary course of the dealings of those two countries with one another,
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but will be influenced by that of the dealings in England with those other
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places. England may be obliged to send out every year money to Holland,
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though its annual exports to that country may exceed very much the annual
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value of its imports from thence, and though what is called the balance of
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trade may be very much in favour of England.
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In the way, besides, in which the par of exchange has hitherto been
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computed, the ordinary course of exchange can afford no sufficient
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indication that the ordinary state of debt and credit is in favour of that
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country which seems to have, or which is supposed to have, the ordinary
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course of exchange in its favour; or, in other words, the real exchange
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may be, and in fact often is, so very different from the computed one,
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that, from the course of the latter, no certain conclusion can, upon many
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occasions, be drawn concerning that of the former.
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When for a sum or money paid in England, containing, according to the
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standard of the English mint, a certain number of ounces of pure silver,
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you receive a bill for a sum of money to be paid in France, containing,
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according to the standard of the French mint, an equal number of ounces of
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pure silver, exchange is said to be at par between England and France.
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When you pay more, you are supposed to give a premium, and exchange is
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said to be against England, and in favour of France. When you pay less,
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you are supposed to get a premium, and exchange is said to be against
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France, and in favour of England.
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But, first, We cannot always judge of the value of the current money of
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different countries by the standard of their respective mints. In some it
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is more, in others it is less worn, clipt, and otherwise degenerated from
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that standard. But the value of the current coin of every country,
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compared with that of any other country, is in proportion, not to the
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quantity of pure silver which it ought to contain, but to that which it
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actually does contain. Before the reformation of the silver coin in King
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William’s time, exchange between England and Holland, computed in the
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usual manner, according to the standard of their respective mints, was
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five-and twenty per cent. against England. But the value of the current
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coin of England, as we learn from Mr Lowndes, was at that time rather more
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than five-and-twenty per cent. below its standard value. The real
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exchange, therefore, may even at that time have been in favour of England,
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notwithstanding the computed exchange was so much against it; a smaller
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number or ounces of pure silver, actually paid in England, may have
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purchased a bill for a greater number of ounces of pure silver to be paid
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in Holland, and the man who was supposed to give, may in reality have got
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the premium. The French coin was, before the late reformation of the
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English gold coin, much less wore than the English, and was perhaps two or
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three per cent. nearer its standard. If the computed exchange with France,
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therefore, was not more than two or three per cent. against England, the
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real exchange might have been in its favour. Since the reformation of the
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gold coin, the exchange has been constantly in favour of England, and
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against France.
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Secondly, In some countries the expense of coinage is defrayed by the
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government; in others, it is defrayed by the private people, who carry
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their bullion to the mint, and the government even derives some revenue
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from the coinage. In England it is defrayed by the government; and if you
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carry a pound weight of standard silver to the mint, you get back
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sixty-two shillings, containing a pound weight of the like standard
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silver. In France a duty of eight per cent. is deducted for the coinage,
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which not only defrays the expense of it, but affords a small revenue to
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the government. In England, as the coinage costs nothing, the current coin
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can never be much more valuable than the quantity of bullion which it
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actually contains. In France, the workmanship, as you pay for it, adds to
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the value, in the same manner as to that of wrought plate. A sum of French
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money, therefore, containing an equal weight of pure silver, is more
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valuable than a sum of English money containing an equal weight of pure
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silver, and must require more bullion, or other commodities, to purchase
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it. Though the current coin of the two countries, therefore, were equally
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near the standards of their respective mints, a sum of English money could
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not well purchase a sum of French money containing an equal number of
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ounces of pure silver, nor, consequently, a bill upon France for such a
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sum. If, for such a bill, no more additional money was paid than what was
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sufficient to compensate the expense of the French coinage, the real
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exchange might be at par between the two countries; their debts and
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credits might mutually compensate one another, while the computed exchange
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was considerably in favour of France. If less than this was paid, the real
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exchange might be in favour of England, while the computed was in favour
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of France.
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Thirdly, and lastly, In some places, as at Amsterdam, Hamburg, Venice,
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etc. foreign bills of exchange are paid in what they call bank money;
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while in others, as at London, Lisbon, Antwerp, Leghorn, etc. they are
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paid in the common currency of the country. What is called bank money, is
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always of more value than the same nominal sum of common currency. A
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thousand guilders in the bank of Amsterdam, for example, are of more value
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than a thousand guilders of Amsterdam currency. The difference between
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them is called the agio of the bank, which at Amsterdam is generally about
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five per cent. Supposing the current money of the two countries equally
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near to the standard of their respective mints, and that the one pays
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foreign bills in this common currency, while the other pays them in bank
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money, it is evident that the computed exchange may be in favour of that
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which pays in bank money, though the real exchange should be in favour of
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that which pays in current money; for the same reason that the computed
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exchange may be in favour of that which pays in better money, or in money
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nearer to its own standard, though the real exchange should be in favour
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of that which pays in worse. The computed exchange, before the late
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reformation of the gold coin, was generally against London with Amsterdam,
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Hamburg, Venice, and, I believe, with all other places which pay in what
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is called bank money. It will by no means follow, however, that the real
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exchange was against it. Since the reformation of the gold coin, it has
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been in favour of London, even with those places. The computed exchange
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has generally been in favour of London with Lisbon, Antwerp, Leghorn, and,
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if you except France, I believe with most other parts of Europe that pay
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in common currency; and it is not improbable that the real exchange was so
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too.
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Digression concerning Banks of Deposit, particularly concerning that of
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Amsterdam.
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The currency of a great state, such as France or England, generally
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consists almost entirely of its own coin. Should this currency, therefore,
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be at any time worn, clipt, or otherwise degraded below its standard
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value, the state, by a reformation of its coin, can effectually
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re-establish its currency. But the currency of a small state, such as
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Genoa or Hamburg, can seldom consist altogether in its own coin, but must
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be made up, in a great measure, of the coins of all the neighbouring
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states with which its inhabitants have a continual intercourse. Such a
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state, therefore, by reforming its coin, will not always be able to reform
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its currency. If foreign bills of exchange are paid in this currency, the
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uncertain value of any sum, of what is in its own nature so uncertain,
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must render the exchange always very much against such a state, its
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currency being in all foreign states necessarily valued even below what it
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is worth.
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In order to remedy the inconvenience to which this disadvantageous
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exchange must have subjected their merchants, such small states, when they
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began to attend to the interest of trade, have frequently enacted that
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foreign bills of exchange of a certain value should be paid, not in common
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currency, but by an order upon, or by a transfer in the books of a certain
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bank, established upon the credit, and under the protection of the state,
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this bank being always obliged to pay, in good and true money, exactly
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according to the standard of the state. The banks of Venice, Genoa,
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Amsterdam, Hamburg, and Nuremberg, seem to have been all originally
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established with this view, though some of them may have afterwards been
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made subservient to other purposes. The money of such banks, being better
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than the common currency of the country, necessarily bore an agio, which
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was greater or smaller, according as the currency was supposed to be more
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or less degraded below the standard of the state. The agio of the bank of
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Hamburg, for example, which is said to be commonly about fourteen per
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cent. is the supposed difference between the good standard money of the
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state, and the clipt, worn, and diminished currency, poured into it from
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all the neighbouring states.
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Before 1609, the great quantity of clipt and worn foreign coin which the
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extensive trade of Amsterdam brought from all parts of Europe, reduced the
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value of its currency about nine per cent. below that of good money fresh
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from the mint. Such money no sooner appeared, than it was melted down or
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carried away, as it always is in such circumstances. The merchants, with
|
|||
|
|
plenty of currency, could not always find a sufficient quantity of good
|
|||
|
|
money to pay their bills of exchange; and the value of those bills, in
|
|||
|
|
spite of several regulations which were made to prevent it, became in a
|
|||
|
|
great measure uncertain.
|
|||
|
|
|
|||
|
|
In order to remedy these inconveniencies, a bank was established in 1609,
|
|||
|
|
under the guarantee of the city. This bank received both foreign coin, and
|
|||
|
|
the light and worn coin of the country, at its real intrinsic value in the
|
|||
|
|
good standard money of the country, deducting only so much as was
|
|||
|
|
necessary for defraying the expense of coinage and the other necessary
|
|||
|
|
expense of management. For the value which remained after this small
|
|||
|
|
deduction was made, it gave a credit in its books. This credit was called
|
|||
|
|
bank money, which, as it represented money exactly according to the
|
|||
|
|
standard of the mint, was always of the same real value, and intrinsically
|
|||
|
|
worth more than current money. It was at the same time enacted, that all
|
|||
|
|
bills drawn upon or negotiated at Amsterdam, of the value of 600 guilders
|
|||
|
|
and upwards, should be paid in bank money, which at once took away all
|
|||
|
|
uncertainty in the value of those bills. Every merchant, in consequence of
|
|||
|
|
this regulation, was obliged to keep an account with the bank, in order to
|
|||
|
|
pay his foreign bills of exchange, which necessarily occasioned a certain
|
|||
|
|
demand for bank money.
|
|||
|
|
|
|||
|
|
Bank money, over and above both its intrinsic superiority to currency, and
|
|||
|
|
the additional value which this demand necessarily gives it, has likewise
|
|||
|
|
some other advantages, It is secure from fire, robbery, and other
|
|||
|
|
accidents; the city of Amsterdam is bound for it; it can be paid away by a
|
|||
|
|
simple transfer, without the trouble of counting, or the risk of
|
|||
|
|
transporting it from one place to another. In consequence of those
|
|||
|
|
different advantages, it seems from the beginning to have borne an agio;
|
|||
|
|
and it is generally believed that all the money originally deposited in
|
|||
|
|
the bank, was allowed to remain there, nobody caring to demand payment of
|
|||
|
|
a debt which he could sell for a premium in the market. By demanding
|
|||
|
|
payment of the bank, the owner of a bank credit would lose this premium.
|
|||
|
|
As a shilling fresh from the mint will buy no more goods in the market
|
|||
|
|
than one of our common worn shillings, so the good and true money which
|
|||
|
|
might be brought from the coffers of the bank into those of a private
|
|||
|
|
person, being mixed and confounded with the common currency of the
|
|||
|
|
country, would be of no more value than that currency, from which it could
|
|||
|
|
no longer be readily distinguished. While it remained in the coffers of
|
|||
|
|
the bank, its superiority was known and ascertained. When it had come into
|
|||
|
|
those of a private person, its superiority could not well be ascertained
|
|||
|
|
without more trouble than perhaps the difference was worth. By being
|
|||
|
|
brought from the coffers of the bank, besides, it lost all the other
|
|||
|
|
advantages of bank money; its security, its easy and safe transferability,
|
|||
|
|
its use in paying foreign bills of exchange. Over and above all this, it
|
|||
|
|
could not be brought from those coffers, as will appear by and by, without
|
|||
|
|
previously paying for the keeping.
|
|||
|
|
|
|||
|
|
Those deposits of coin, or those deposits which the bank was bound to
|
|||
|
|
restore in coin, constituted the original capital of the bank, or the
|
|||
|
|
whole value of what was represented by what is called bank money. At
|
|||
|
|
present they are supposed to constitute but a very small part of it. In
|
|||
|
|
order to facilitate the trade in bullion, the bank has been for these many
|
|||
|
|
years in the practice of giving credit in its books, upon deposits of gold
|
|||
|
|
and silver bullion. This credit is generally about five per cent. below
|
|||
|
|
the mint price of such bullion. The bank grants at the same time what is
|
|||
|
|
called a recipice or receipt, entitling the person who makes the deposit,
|
|||
|
|
or the bearer, to take out the bullion again at any time within six
|
|||
|
|
months, upon transferring to the bank a quantity of bank money equal to
|
|||
|
|
that for which credit had been given in its books when the deposit was
|
|||
|
|
made, and upon paying one-fourth per cent. for the keeping, if the deposit
|
|||
|
|
was in silver; and one-half per cent. if it was in gold; but at the same
|
|||
|
|
time declaring, that in default of such payment, and upon the expiration
|
|||
|
|
of this term, the deposit should belong to the bank, at the price at which
|
|||
|
|
it had been received, or for which credit had been given in the transfer
|
|||
|
|
books. What is thus paid for the keeping of the deposit may be considered
|
|||
|
|
as a sort of warehouse rent; and why this warehouse rent should be so much
|
|||
|
|
dearer for gold than for silver, several different reasons have been
|
|||
|
|
assigned. The fineness of gold, it has been said, is more difficult to be
|
|||
|
|
ascertained than that of silver. Frauds are more easily practised, and
|
|||
|
|
occasion a greater loss in the most precious metal. Silver, besides, being
|
|||
|
|
the standard metal, the state, it has been said, wishes to encourage more
|
|||
|
|
the making of deposits of silver than those of gold.
|
|||
|
|
|
|||
|
|
Deposits of bullion are most commonly made when the price is somewhat
|
|||
|
|
lower than ordinary, and they are taken out again when it happens to rise.
|
|||
|
|
In Holland the market price of bullion is generally above the mint price,
|
|||
|
|
for the same reason that it was so in England before the late reformation
|
|||
|
|
of the gold coin. The difference is said to be commonly from about six to
|
|||
|
|
sixteen stivers upon the mark, or eight ounces of silver, of eleven parts
|
|||
|
|
of fine and one part alloy. The bank price, or the credit which the bank
|
|||
|
|
gives for the deposits of such silver (when made in foreign coin, of which
|
|||
|
|
the fineness is well known and ascertained, such as Mexico dollars), is
|
|||
|
|
twenty-two guilders the mark: the mint price is about twenty-three
|
|||
|
|
guilders, and the market price is from twenty-three guilders six, to
|
|||
|
|
twenty-three guilders sixteen stivers, or from two to three per cent.
|
|||
|
|
above the mint price.
|
|||
|
|
|
|||
|
|
The following are the prices at which the bank of Amsterdam at present
|
|||
|
|
{September 1775} receives bullion and coin of different kinds:
|
|||
|
|
|
|||
|
|
|
|||
|
|
SILVER
|
|||
|
|
Mexico dollars ................. 22 Guilders / mark
|
|||
|
|
French crowns .................. 22
|
|||
|
|
English silver coin............. 22
|
|||
|
|
Mexico dollars, new coin........ 21 10
|
|||
|
|
Ducatoons....................... 3 0
|
|||
|
|
Rix-dollars..................... 2 8
|
|||
|
|
|
|||
|
|
|
|||
|
|
|
|||
|
|
Bar silver, containing 11-12ths fine silver, 21 Guilders / mark, and in
|
|||
|
|
this proportion down to 1-4th fine, on which 5 guilders are given. Fine
|
|||
|
|
bars,................. 28 Guilders / mark.
|
|||
|
|
|
|||
|
|
|
|||
|
|
GOLD
|
|||
|
|
Portugal coin................. 310 Guilders / mark
|
|||
|
|
Guineas....................... 310
|
|||
|
|
Louis d’ors, new.............. 310
|
|||
|
|
Ditto old.............. 300
|
|||
|
|
New ducats.................... 4 19 8 per ducat
|
|||
|
|
|
|||
|
|
|
|||
|
|
|
|||
|
|
Bar or ingot gold is received in proportion to its fineness, compared with
|
|||
|
|
the above foreign gold coin. Upon fine bars the bank gives 340 per mark.
|
|||
|
|
In general, however, something more is given upon coin of a known
|
|||
|
|
fineness, than upon gold and silver bars, of which the fineness cannot be
|
|||
|
|
ascertained but by a process of melting and assaying.
|
|||
|
|
|
|||
|
|
The proportions between the bank price, the mint price, and the market
|
|||
|
|
price of gold bullion, are nearly the same. A person can generally sell
|
|||
|
|
his receipt for the difference between the mint price of bullion and the
|
|||
|
|
market price. A receipt for bullion is almost always worth something, and
|
|||
|
|
it very seldom happens, therefore, that anybody suffers his receipts to
|
|||
|
|
expire, or allows his bullion to fall to the bank at the price at which it
|
|||
|
|
had been received, either by not taking it out before the end of the six
|
|||
|
|
months, or by neglecting to pay one fourth or one half per cent. in order
|
|||
|
|
to obtain a new receipt for another six months. This, however, though it
|
|||
|
|
happens seldom, is said to happen sometimes, and more frequently with
|
|||
|
|
regard to gold than with regard to silver, on account of the higher
|
|||
|
|
warehouse rent which is paid for the keeping of the more precious metal.
|
|||
|
|
|
|||
|
|
The person who, by making a deposit of bullion, obtains both a bank credit
|
|||
|
|
and a receipt, pays his bills of exchange as they become due, with his
|
|||
|
|
bank credit; and either sells or keeps his receipt, according as he judges
|
|||
|
|
that the price of bullion is likely to rise or to fall. The receipt and
|
|||
|
|
the bank credit seldom keep long together, and there is no occasion that
|
|||
|
|
they should. The person who has a receipt, and who wants to take out
|
|||
|
|
bullion, finds always plenty of bank credits, or bank money, to buy at the
|
|||
|
|
ordinary price, and the person who has bank money, and wants to take out
|
|||
|
|
bullion, finds receipts always in equal abundance.
|
|||
|
|
|
|||
|
|
The owners of bank credits, and the holders of receipts, constitute two
|
|||
|
|
different sorts of creditors against the bank. The holder of a receipt
|
|||
|
|
cannot draw out the bullion for which it is granted, without re-assigning
|
|||
|
|
to the bank a sum of bank money equal to the price at which the bullion
|
|||
|
|
had been received. If he has no bank money of his own, he must purchase it
|
|||
|
|
of those who have it. The owner of bank money cannot draw out bullion,
|
|||
|
|
without producing to the bank receipts for the quantity which he wants. If
|
|||
|
|
he has none of his own, he must buy them of those who have them. The
|
|||
|
|
holder of a receipt, when he purchases bank money, purchases the power of
|
|||
|
|
taking out a quantity of bullion, of which the mint price is five per
|
|||
|
|
cent. above the bank price. The agio of five per cent. therefore, which he
|
|||
|
|
commonly pays for it, is paid, not for an imaginary, but for a real value.
|
|||
|
|
The owner of bank money, when he purchases a receipt, purchases the power
|
|||
|
|
of taking out a quantity of bullion, of which the market price is commonly
|
|||
|
|
from two to three per cent. above the mint price. The price which he pays
|
|||
|
|
for it, therefore, is paid likewise for a real value. The price of the
|
|||
|
|
receipt, and the price of the bank money, compound or make up between them
|
|||
|
|
the full value or price of the bullion.
|
|||
|
|
|
|||
|
|
Upon deposits of the coin current in the country, the bank grant receipts
|
|||
|
|
likewise, as well as bank credits; but those receipts are frequently of no
|
|||
|
|
value and will bring no price in the market. Upon ducatoons, for example,
|
|||
|
|
which in the currency pass for three guilders three stivers each, the bank
|
|||
|
|
gives a credit of three guilders only, or five per cent. below their
|
|||
|
|
current value. It grants a receipt likewise, entitling the bearer to take
|
|||
|
|
out the number of ducatoons deposited at any time within six months, upon
|
|||
|
|
paying one fourth per cent. for the keeping. This receipt will frequently
|
|||
|
|
bring no price in the market. Three guilders, bank money, generally sell
|
|||
|
|
in the market for three guilders three stivers, the full value of the
|
|||
|
|
ducatoons, if they were taken out of the bank; and before they can be
|
|||
|
|
taken out, one-fourth per cent. must be paid for the keeping, which would
|
|||
|
|
be mere loss to the holder of the receipt. If the agio of the bank,
|
|||
|
|
however, should at any time fall to three per cent. such receipts might
|
|||
|
|
bring some price in the market, and might sell for one and three-fourths
|
|||
|
|
per cent. But the agio of the bank being now generally about five per
|
|||
|
|
cent. such receipts are frequently allowed to expire, or, as they express
|
|||
|
|
it, to fall to the bank. The receipts which are given for deposits of gold
|
|||
|
|
ducats fall to it yet more frequently, because a higher warehouse rent, or
|
|||
|
|
one half per cent. must be paid for the keeping of them, before they can
|
|||
|
|
be taken out again. The five per cent. which the bank gains, when deposits
|
|||
|
|
either of coin or bullion are allowed to fall to it, maybe considered as
|
|||
|
|
the warehouse rent for the perpetual keeping of such deposits.
|
|||
|
|
|
|||
|
|
The sum of bank money, for which the receipts are expired, must be very
|
|||
|
|
considerable. It must comprehend the whole original capital of the bank,
|
|||
|
|
which, it is generally supposed, has been allowed to remain there from the
|
|||
|
|
time it was first deposited, nobody caring either to renew his receipt, or
|
|||
|
|
to take out his deposit, as, for the reasons already assigned, neither the
|
|||
|
|
one nor the other could be done without loss. But whatever may be the
|
|||
|
|
amount of this sum, the proportion which it bears to the whole mass of
|
|||
|
|
bank money is supposed to be very small. The bank of Amsterdam has, for
|
|||
|
|
these many years past, been the great warehouse of Europe for bullion, for
|
|||
|
|
which the receipts are very seldom allowed to expire, or, as they express
|
|||
|
|
it, to fall to the bank. The far greater part of the bank money, or of the
|
|||
|
|
credits upon the books of the bank, is supposed to have been created, for
|
|||
|
|
these many years past, by such deposits, which the dealers in bullion are
|
|||
|
|
continually both making and withdrawing.
|
|||
|
|
|
|||
|
|
No demand can be made upon the bank, but by means of a recipice or
|
|||
|
|
receipt. The smaller mass of bank money, for which the receipts are
|
|||
|
|
expired, is mixed and confounded with the much greater mass for which they
|
|||
|
|
are still in force; so that, though there may be a considerable sum of
|
|||
|
|
bank money, for which there are no receipts, there is no specific sum or
|
|||
|
|
portion of it which may not at any time be demanded by one. The bank
|
|||
|
|
cannot be debtor to two persons for the same thing; and the owner of bank
|
|||
|
|
money who has no receipt, cannot demand payment of the bank till he buys
|
|||
|
|
one. In ordinary and quiet times, he can find no difficulty in getting one
|
|||
|
|
to buy at the market price, which generally corresponds with the price at
|
|||
|
|
which he can sell the coin or bullion it entitles him to take out of the
|
|||
|
|
bank.
|
|||
|
|
|
|||
|
|
It might be otherwise during a public calamity; an invasion, for example,
|
|||
|
|
such as that of the French in 1672. The owners of bank money being then
|
|||
|
|
all eager to draw it out of the bank, in order to have it in their own
|
|||
|
|
keeping, the demand for receipts might raise their price to an exorbitant
|
|||
|
|
height. The holders of them might form extravagant expectations, and,
|
|||
|
|
instead of two or three per cent. demand half the bank money for which
|
|||
|
|
credit had been given upon the deposits that the receipts had respectively
|
|||
|
|
been granted for. The enemy, informed of the constitution of the bank,
|
|||
|
|
might even buy them up, in order to prevent the carrying away of the
|
|||
|
|
treasure. In such emergencies, the bank, it is supposed, would break
|
|||
|
|
through its ordinary rule of making payment only to the holders of
|
|||
|
|
receipts. The holders of receipts, who had no bank money, must have
|
|||
|
|
received within two or three per cent. of the value of the deposit for
|
|||
|
|
which their respective receipts had been granted. The bank, therefore, it
|
|||
|
|
is said, would in this case make no scruple of paying, either with money
|
|||
|
|
or bullion, the full value of what the owners of bank money, who could get
|
|||
|
|
no receipts, were credited for in its books; paying, at the same time, two
|
|||
|
|
or three per cent. to such holders of receipts as had no bank money, that
|
|||
|
|
being the whole value which, in this state of things, could justly be
|
|||
|
|
supposed due to them.
|
|||
|
|
|
|||
|
|
Even in ordinary and quiet times, it is the interest of the holders of
|
|||
|
|
receipts to depress the agio, in order either to buy bank money (and
|
|||
|
|
consequently the bullion which their receipts would then enable them to
|
|||
|
|
take out of the bank ) so much cheaper, or to sell their receipts to those
|
|||
|
|
who have bank money, and who want to take out bullion, so much dearer; the
|
|||
|
|
price of a receipt being generally equal to the difference between the
|
|||
|
|
market price of bank money and that of the coin or bullion for which the
|
|||
|
|
receipt had been granted. It is the interest of the owners of bank money,
|
|||
|
|
on the contrary, to raise the agio, in order either to sell their bank
|
|||
|
|
money so much dearer, or to buy a receipt so much cheaper. To prevent the
|
|||
|
|
stock-jobbing tricks which those opposite interests might sometimes
|
|||
|
|
occasion, the bank has of late years come to the resolution, to sell at
|
|||
|
|
all times bank money for currency at five per cent. agio, and to buy it in
|
|||
|
|
again at four per cent. agio. In consequence of this resolution, the agio
|
|||
|
|
can never either rise above five, or sink below four per cent.; and the
|
|||
|
|
proportion between the market price of bank and that of current money is
|
|||
|
|
kept at all times very near the proportion between their intrinsic values.
|
|||
|
|
Before this resolution was taken, the market price of bank money used
|
|||
|
|
sometimes to rise so high as nine per cent. agio, and sometimes to sink so
|
|||
|
|
low as par, according as opposite interests happened to influence the
|
|||
|
|
market.
|
|||
|
|
|
|||
|
|
The bank of Amsterdam professes to lend out no part of what is deposited
|
|||
|
|
with it, but for every guilder for which it gives credit in its books, to
|
|||
|
|
keep in its repositories the value of a guilder either in money or
|
|||
|
|
bullion. That it keeps in its repositories all the money or bullion for
|
|||
|
|
which there are receipts in force for which it is at all times liable to
|
|||
|
|
be called upon, and which in reality is continually going from it, and
|
|||
|
|
returning to it again, cannot well be doubted. But whether it does so
|
|||
|
|
likewise with regard to that part of its capital for which the receipts
|
|||
|
|
are long ago expired, for which, in ordinary and quiet times, it cannot be
|
|||
|
|
called upon, and which, in reality, is very likely to remain with it for
|
|||
|
|
ever, or as long as the states of the United Provinces subsist, may
|
|||
|
|
perhaps appear more uncertain. At Amsterdam, however, no point of faith is
|
|||
|
|
better established than that, for every guilder circulated as bank money,
|
|||
|
|
there is a correspondent guilder in gold or silver to be found in the
|
|||
|
|
treasures of the bank. The city is guarantee that it should be so. The
|
|||
|
|
bank is under the direction of the four reigning burgomasters who are
|
|||
|
|
changed every year. Each new set of burgomasters visits the treasure,
|
|||
|
|
compares it with the books, receives it upon oath, and delivers it over,
|
|||
|
|
with the same awful solemnity to the set which succeeds; and in that sober
|
|||
|
|
and religious country, oaths are not yet disregarded. A rotation of this
|
|||
|
|
kind seems alone a sufficient security against any practices which cannot
|
|||
|
|
be avowed. Amidst all the revolutions which faction has ever occasioned in
|
|||
|
|
the government of Amsterdam, the prevailing party has at no time accused
|
|||
|
|
their predecessors of infidelity in the administration of the bank. No
|
|||
|
|
accusation could have affected more deeply the reputation and fortune of
|
|||
|
|
the disgraced party; and if such an accusation could have been supported,
|
|||
|
|
we may be assured that it would have been brought. In 1672, when the
|
|||
|
|
French king was at Utrecht, the bank of Amsterdam paid so readily, as left
|
|||
|
|
no doubt of the fidelity with which it had observed its engagements. Some
|
|||
|
|
of the pieces which were then brought from its repositories, appeared to
|
|||
|
|
have been scorched with the fire which happened in the town-house soon
|
|||
|
|
after the bank was established. Those pieces, therefore, must have lain
|
|||
|
|
there from that time.
|
|||
|
|
|
|||
|
|
What may be the amount of the treasure in the bank, is a question which
|
|||
|
|
has long employed the speculations of the curious. Nothing but conjecture
|
|||
|
|
can be offered concerning it. It is generally reckoned, that there are
|
|||
|
|
about 2000 people who keep accounts with the bank; and allowing them to
|
|||
|
|
have, one with another, the value of £1500 sterling lying upon their
|
|||
|
|
respective accounts (a very large allowance), the whole quantity of bank
|
|||
|
|
money, and consequently of treasure in the bank, will amount to about
|
|||
|
|
£3,000,000 sterling, or, at eleven guilders the pound sterling, 33,000,000
|
|||
|
|
of guilders; a great sum, and sufficient to carry on a very extensive
|
|||
|
|
circulation, but vastly below the extravagant ideas which some people have
|
|||
|
|
formed of this treasure.
|
|||
|
|
|
|||
|
|
The city of Amsterdam derives a considerable revenue from the bank.
|
|||
|
|
Besides what may be called the warehouse rent above mentioned, each
|
|||
|
|
person, upon first opening an account with the bank, pays a fee of ten
|
|||
|
|
guilders; and for every new account, three guilders three stivers; for
|
|||
|
|
every transfer, two stivers; and if the transfer is for less than 300
|
|||
|
|
guilders, six stivers, in order to discourage the multiplicity of small
|
|||
|
|
transactions. The person who neglects to balance his account twice in the
|
|||
|
|
year, forfeits twenty-five guilders. The person who orders a transfer for
|
|||
|
|
more than is upon his account, is obliged to pay three per cent. for the
|
|||
|
|
sum overdrawn, and his order is set aside into the bargain. The bank is
|
|||
|
|
supposed, too, to make a considerable profit by the sale of the foreign
|
|||
|
|
coin or bullion which sometimes falls to it by the expiring of receipts,
|
|||
|
|
and which is always kept till it can be sold with advantage. It makes a
|
|||
|
|
profit, likewise, by selling bank money at five per cent. agio, and buying
|
|||
|
|
it in at four. These different emoluments amount to a good deal more than
|
|||
|
|
what is necessary for paying the salaries of officers, and defraying the
|
|||
|
|
expense of management. What is paid for the keeping of bullion upon
|
|||
|
|
receipts, is alone supposed to amount to a neat annual revenue of between
|
|||
|
|
150,000 and 200,000 guilders. Public utility, however, and not revenue,
|
|||
|
|
was the original object of this institution. Its object was to relieve the
|
|||
|
|
merchants from the inconvenience of a disadvantageous exchange. The
|
|||
|
|
revenue which has arisen from it was unforeseen, and may be considered as
|
|||
|
|
accidental. But it is now time to return from this long digression, into
|
|||
|
|
which I have been insensibly led, in endeavouring to explain the reasons
|
|||
|
|
why the exchange between the countries which pay in what is called bank
|
|||
|
|
money, and those which pay in common currency, should generally appear to
|
|||
|
|
be in favour of the former, and against the latter. The former pay in a
|
|||
|
|
species of money, of which the intrinsic value is always the same, and
|
|||
|
|
exactly agreeable to the standard of their respective mints; the latter is
|
|||
|
|
a species of money, of which the intrinsic value is continually varying,
|
|||
|
|
and is almost always more or less below that standard.
|
|||
|
|
|
|||
|
|
|
|||
|
|
|
|||
|
|
|
|||
|
|
PART II.—Of the Unreasonableness of those extraordinary Restraints,
|
|||
|
|
upon other Principles.
|
|||
|
|
|
|||
|
|
In the foregoing part of this chapter, I have endeavoured to show, even
|
|||
|
|
upon the principles of the commercial system, how unnecessary it is to lay
|
|||
|
|
extraordinary restraints upon the importation of goods from those
|
|||
|
|
countries with which the balance of trade is supposed to be
|
|||
|
|
disadvantageous.
|
|||
|
|
|
|||
|
|
Nothing, however, can be more absurd than this whole doctrine of the
|
|||
|
|
balance of trade, upon which, not only these restraints, but almost all
|
|||
|
|
the other regulations of commerce, are founded. When two places trade with
|
|||
|
|
one another, this doctrine supposes that, if the balance be even, neither
|
|||
|
|
of them either loses or gains; but if it leans in any degree to one side,
|
|||
|
|
that one of them loses, and the other gains, in proportion to its
|
|||
|
|
declension from the exact equilibrium. Both suppositions are false. A
|
|||
|
|
trade, which is forced by means of bounties and monopolies, may be, and
|
|||
|
|
commonly is, disadvantageous to the country in whose favour it is meant to
|
|||
|
|
be established, as I shall endeavour to show hereafter. But that trade
|
|||
|
|
which, without force or constraint, is naturally and regularly carried on
|
|||
|
|
between any two places, is always advantageous, though not always equally
|
|||
|
|
so, to both.
|
|||
|
|
|
|||
|
|
By advantage or gain, I understand, not the increase of the quantity of
|
|||
|
|
gold and silver, but that of the exchangeable value of the annual produce
|
|||
|
|
of the land and labour of the country, or the increase of the annual
|
|||
|
|
revenue of its inhabitants.
|
|||
|
|
|
|||
|
|
If the balance be even, and if the trade between the two places consist
|
|||
|
|
altogether in the exchange of their native commodities, they will, upon
|
|||
|
|
most occasions, not only both gain, but they will gain equally, or very
|
|||
|
|
nearly equally; each will, in this case, afford a market for a part of the
|
|||
|
|
surplus produce of the other; each will replace a capital which had been
|
|||
|
|
employed in raising and preparing for the market this part of the surplus
|
|||
|
|
produce of the other, and which had been distributed among, and given
|
|||
|
|
revenue and maintenance to, a certain number of its inhabitants. Some part
|
|||
|
|
of the inhabitants of each, therefore, will directly derive their revenue
|
|||
|
|
and maintenance from the other. As the commodities exchanged, too, are
|
|||
|
|
supposed to be of equal value, so the two capitals employed in the trade
|
|||
|
|
will, upon most occasions, be equal, or very nearly equal; and both being
|
|||
|
|
employed in raising the native commodities of the two countries, the
|
|||
|
|
revenue and maintenance which their distribution will afford to the
|
|||
|
|
inhabitants of each will be equal, or very nearly equal. This revenue and
|
|||
|
|
maintenance, thus mutually afforded, will be greater or smaller, in
|
|||
|
|
proportion to the extent of their dealings. If these should annually
|
|||
|
|
amount to £100,000, for example, or to £1,000,000, on each side, each of
|
|||
|
|
them will afford an annual revenue, in the one case, of £100,000, and, in
|
|||
|
|
the other, of £1,000,000, to the inhabitants of the other.
|
|||
|
|
|
|||
|
|
If their trade should be of such a nature, that one of them exported to
|
|||
|
|
the other nothing but native commodities, while the returns of that other
|
|||
|
|
consisted altogether in foreign goods; the balance, in this case, would
|
|||
|
|
still be supposed even, commodities being paid for with commodities. They
|
|||
|
|
would, in this case too, both gain, but they would not gain equally; and
|
|||
|
|
the inhabitants of the country which exported nothing but native
|
|||
|
|
commodities, would derive the greatest revenue from the trade. If England,
|
|||
|
|
for example, should import from France nothing but the native commodities
|
|||
|
|
of that country, and not having such commodities of its own as were in
|
|||
|
|
demand there, should annually repay them by sending thither a large
|
|||
|
|
quantity of foreign goods, tobacco, we shall suppose, and East India
|
|||
|
|
goods; this trade, though it would give some revenue to the inhabitants of
|
|||
|
|
both countries, would give more to those of France than to those of
|
|||
|
|
England. The whole French capital annually employed in it would annually
|
|||
|
|
be distributed among the people of France; but that part of the English
|
|||
|
|
capital only, which was employed in producing the English commodities with
|
|||
|
|
which those foreign goods were purchased, would be annually distributed
|
|||
|
|
among the people of England. The greater part of it would replace the
|
|||
|
|
capitals which had been employed in Virginia, Indostan, and China, and
|
|||
|
|
which had given revenue and maintenance to the inhabitants of those
|
|||
|
|
distant countries. If the capitals were equal, or nearly equal, therefore,
|
|||
|
|
this employment of the French capital would augment much more the revenue
|
|||
|
|
of the people of France, than that of the English capital would the
|
|||
|
|
revenue of the people of England. France would, in this case, carry on a
|
|||
|
|
direct foreign trade of consumption with England; whereas England would
|
|||
|
|
carry on a round-about trade of the same kind with France. The different
|
|||
|
|
effects of a capital employed in the direct, and of one employed in the
|
|||
|
|
round-about foreign trade of consumption, have already been fully
|
|||
|
|
explained.
|
|||
|
|
|
|||
|
|
There is not, probably, between any two countries, a trade which consists
|
|||
|
|
altogether in the exchange, either of native commodities on both sides, or
|
|||
|
|
of native commodities on one side, and of foreign goods on the other.
|
|||
|
|
Almost all countries exchange with one another, partly native and partly
|
|||
|
|
foreign goods. That country, however, in whose cargoes there is the
|
|||
|
|
greatest proportion of native, and the least of foreign goods, will always
|
|||
|
|
be the principal gainer.
|
|||
|
|
|
|||
|
|
If it was not with tobacco and East India goods, but with gold and silver,
|
|||
|
|
that England paid for the commodities annually imported from France, the
|
|||
|
|
balance, in this case, would be supposed uneven, commodities not being
|
|||
|
|
paid for with commodities, but with gold and silver. The trade, however,
|
|||
|
|
would in this case, as in the foregoing, give some revenue to the
|
|||
|
|
inhabitants of both countries, but more to those of France than to those
|
|||
|
|
of England. It would give some revenue to those of England. The capital
|
|||
|
|
which had been employed in producing the English goods that purchased this
|
|||
|
|
gold and silver, the capital which had been distributed among, and given
|
|||
|
|
revenue to, certain inhabitants of England, would thereby be replaced, and
|
|||
|
|
enabled to continue that employment. The whole capital of England would no
|
|||
|
|
more be diminished by this exportation of gold and silver, than by the
|
|||
|
|
exportation of an equal value of any other goods. On the contrary, it
|
|||
|
|
would, in most cases, be augmented. No goods are sent abroad but those for
|
|||
|
|
which the demand is supposed to be greater abroad than at home, and of
|
|||
|
|
which the returns, consequently, it is expected, will be of more value at
|
|||
|
|
home than the commodities exported. If the tobacco which in England is
|
|||
|
|
worth only £100,000, when sent to France, will purchase wine which is in
|
|||
|
|
England worth £110,000, the exchange will augment the capital of England
|
|||
|
|
by £10,000. If £100,000 of English gold, in the same manner, purchase
|
|||
|
|
French wine, which in England is worth £110,000, this exchange will
|
|||
|
|
equally augment the capital of England by £10,000. As a merchant, who has
|
|||
|
|
£110,000 worth of wine in his cellar, is a richer man than he who has only
|
|||
|
|
£100,000 worth of tobacco in his warehouse, so is he likewise a richer man
|
|||
|
|
than he who has only £100,000 worth of gold in his coffers. He can put
|
|||
|
|
into motion a greater quantity of industry, and give revenue, maintenance,
|
|||
|
|
and employment, to a greater number of people, than either of the other
|
|||
|
|
two. But the capital of the country is equal to the capital of all its
|
|||
|
|
different inhabitants; and the quantity of industry which can be annually
|
|||
|
|
maintained in it is equal to what all those different capitals can
|
|||
|
|
maintain. Both the capital of the country, therefore, and the quantity of
|
|||
|
|
industry which can be annually maintained in it, must generally be
|
|||
|
|
augmented by this exchange. It would, indeed, be more advantageous for
|
|||
|
|
England that it could purchase the wines of France with its own hardware
|
|||
|
|
and broad cloth, than with either the tobacco of Virginia, or the gold and
|
|||
|
|
silver of Brazil and Peru. A direct foreign trade of consumption is always
|
|||
|
|
more advantageous than a round-about one. But a round-about foreign trade
|
|||
|
|
of consumption, which is carried on with gold and silver, does not seem to
|
|||
|
|
be less advantageous than any other equally round-about one. Neither is a
|
|||
|
|
country which has no mines, more likely to be exhausted of gold and silver
|
|||
|
|
by this annual exportation of those metals, than one which does not grow
|
|||
|
|
tobacco by the like annual exportation of that plant. As a country which
|
|||
|
|
has wherewithal to buy tobacco will never be long in want of it, so
|
|||
|
|
neither will one be long in want of gold and silver which has wherewithal
|
|||
|
|
to purchase those metals.
|
|||
|
|
|
|||
|
|
It is a losing trade, it is said, which a workman carries on with the
|
|||
|
|
alehouse; and the trade which a manufacturing nation would naturally carry
|
|||
|
|
on with a wine country, may be considered as a trade of the same nature. I
|
|||
|
|
answer, that the trade with the alehouse is not necessarily a losing
|
|||
|
|
trade. In its own nature it is just as advantageous as any other, though,
|
|||
|
|
perhaps, somewhat more liable to be abused. The employment of a brewer,
|
|||
|
|
and even that of a retailer of fermented liquors, are as necessary
|
|||
|
|
divisions of labour as any other. It will generally be more advantageous
|
|||
|
|
for a workman to buy of the brewer the quantity he has occasion for, than
|
|||
|
|
to brew it himself; and if he is a poor workman, it will generally be more
|
|||
|
|
advantageous for him to buy it by little and little of the retailer, than
|
|||
|
|
a large quantity of the brewer. He may no doubt buy too much of either, as
|
|||
|
|
he may of any other dealers in his neighbourhood; of the butcher, if he is
|
|||
|
|
a glutton; or of the draper, if he affects to be a beau among his
|
|||
|
|
companions. It is advantageous to the great body of workmen,
|
|||
|
|
notwithstanding, that all these trades should be free, though this freedom
|
|||
|
|
may be abused in all of them, and is more likely to be so, perhaps, in
|
|||
|
|
some than in others. Though individuals, besides, may sometimes ruin their
|
|||
|
|
fortunes by an excessive consumption of fermented liquors, there seems to
|
|||
|
|
be no risk that a nation should do so. Though in every country there are
|
|||
|
|
many people who spend upon such liquors more than they can afford, there
|
|||
|
|
are always many more who spend less. It deserves to be remarked, too, that
|
|||
|
|
if we consult experience, the cheapness of wine seems to be a cause, not
|
|||
|
|
of drunkenness, but of sobriety. The inhabitants of the wine countries are
|
|||
|
|
in general the soberest people of Europe; witness the Spaniards, the
|
|||
|
|
Italians, and the inhabitants of the southern provinces of France. People
|
|||
|
|
are seldom guilty of excess in what is their daily fare. Nobody affects
|
|||
|
|
the character of liberality and good fellowship, by being profuse of a
|
|||
|
|
liquor which is as cheap as small beer. On the contrary, in the countries
|
|||
|
|
which, either from excessive heat or cold, produce no grapes, and where
|
|||
|
|
wine consequently is dear and a rarity, drunkenness is a common vice, as
|
|||
|
|
among the northern nations, and all those who live between the tropics,
|
|||
|
|
the negroes, for example on the coast of Guinea. When a French regiment
|
|||
|
|
comes from some of the northern provinces of France, where wine is
|
|||
|
|
somewhat dear, to be quartered in the southern, where it is very cheap,
|
|||
|
|
the soldiers, I have frequently heard it observed, are at first debauched
|
|||
|
|
by the cheapness and novelty of good wine; but after a few months
|
|||
|
|
residence, the greater part of them become as sober as the rest of the
|
|||
|
|
inhabitants. Were the duties upon foreign wines, and the excises upon
|
|||
|
|
malt, beer, and ale, to be taken away all at once, it might, in the same
|
|||
|
|
manner, occasion in Great Britain a pretty general and temporary
|
|||
|
|
drunkenness among the middling and inferior ranks of people, which would
|
|||
|
|
probably be soon followed by a permanent and almost universal sobriety. At
|
|||
|
|
present, drunkenness is by no means the vice of people of fashion, or of
|
|||
|
|
those who can easily afford the most expensive liquors. A gentleman drunk
|
|||
|
|
with ale has scarce ever been seen among us. The restraints upon the wine
|
|||
|
|
trade in Great Britain, besides, do not so much seem calculated to hinder
|
|||
|
|
the people from going, if I may say so, to the alehouse, as from going
|
|||
|
|
where they can buy the best and cheapest liquor. They favour the wine
|
|||
|
|
trade of Portugal, and discourage that of France. The Portuguese, it is
|
|||
|
|
said, indeed, are better customers for our manufactures than the French,
|
|||
|
|
and should therefore be encouraged in preference to them. As they give us
|
|||
|
|
their custom, it is pretended we should give them ours. The sneaking arts
|
|||
|
|
of underling tradesmen are thus erected into political maxims for the
|
|||
|
|
conduct of a great empire; for it is the most underling tradesmen only who
|
|||
|
|
make it a rule to employ chiefly their own customers. A great trader
|
|||
|
|
purchases his goods always where they are cheapest and best, without
|
|||
|
|
regard to any little interest of this kind.
|
|||
|
|
|
|||
|
|
By such maxims as these, however, nations have been taught that their
|
|||
|
|
interest consisted in beggaring all their neighbours. Each nation has been
|
|||
|
|
made to look with an invidious eye upon the prosperity of all the nations
|
|||
|
|
with which it trades, and to consider their gain as its own loss.
|
|||
|
|
Commerce, which ought naturally to be, among nations as among individuals,
|
|||
|
|
a bond of union and friendship, has become the most fertile source of
|
|||
|
|
discord and animosity. The capricious ambition of kings and ministers has
|
|||
|
|
not, during the present and the preceding century, been more fatal to the
|
|||
|
|
repose of Europe, than the impertinent jealousy of merchants and
|
|||
|
|
manufacturers. The violence and injustice of the rulers of mankind is an
|
|||
|
|
ancient evil, for which, I am afraid, the nature of human affairs can
|
|||
|
|
scarce admit of a remedy: but the mean rapacity, the monopolizing spirit,
|
|||
|
|
of merchants and manufacturers, who neither are, nor ought to be, the
|
|||
|
|
rulers of mankind, though it cannot, perhaps, be corrected, may very
|
|||
|
|
easily be prevented from disturbing the tranquillity of anybody but
|
|||
|
|
themselves.
|
|||
|
|
|
|||
|
|
That it was the spirit of monopoly which originally both invented and
|
|||
|
|
propagated this doctrine, cannot be doubted and they who first taught it,
|
|||
|
|
were by no means such fools as they who believed it. In every country it
|
|||
|
|
always is, and must be, the interest of the great body of the people, to
|
|||
|
|
buy whatever they want of those who sell it cheapest. The proposition is
|
|||
|
|
so very manifest, that it seems ridiculous to take any pains to prove it;
|
|||
|
|
nor could it ever have been called in question, had not the interested
|
|||
|
|
sophistry of merchants and manufacturers confounded the common sense of
|
|||
|
|
mankind. Their interest is, in this respect, directly opposite to that of
|
|||
|
|
the great body of the people. As it is the interest of the freemen of a
|
|||
|
|
corporation to hinder the rest of the inhabitants from employing any
|
|||
|
|
workmen but themselves; so it is the interest of the merchants and
|
|||
|
|
manufacturers of every country to secure to themselves the monopoly of the
|
|||
|
|
home market. Hence, in Great Britain, and in most other European
|
|||
|
|
countries, the extraordinary duties upon almost all goods imported by
|
|||
|
|
alien merchants. Hence the high duties and prohibitions upon all those
|
|||
|
|
foreign manufactures which can come into competition with our own. Hence,
|
|||
|
|
too, the extraordinary restraints upon the importation of almost all sorts
|
|||
|
|
of goods from those countries with which the balance of trade is supposed
|
|||
|
|
to be disadvantageous; that is, from those against whom national animosity
|
|||
|
|
happens ta be most violently inflamed.
|
|||
|
|
|
|||
|
|
The wealth of neighbouring nations, however, though dangerous in war and
|
|||
|
|
politics, is certainly advantageous in trade. In a state of hostility, it
|
|||
|
|
may enable our enemies to maintain fleets and armies superior to our own;
|
|||
|
|
but in a state of peace and commerce it must likewise enable them to
|
|||
|
|
exchange with us to a greater value, and to afford a better market, either
|
|||
|
|
for the immediate produce of our own industry, or for whatever is
|
|||
|
|
purchased with that produce. As a rich man is likely to be a better
|
|||
|
|
customer to the industrious people in his neighbourhood, than a poor, so
|
|||
|
|
is likewise a rich nation. A rich man, indeed, who is himself a
|
|||
|
|
manufacturer, is a very dangerous neighbour to all those who deal in the
|
|||
|
|
same way. All the rest of the neighbourhood, however, by far the greatest
|
|||
|
|
number, profit by the good market which his expense affords them. They
|
|||
|
|
even profit by his underselling the poorer workmen who deal in the same
|
|||
|
|
way with him. The manufacturers of a rich nation, in the same manner, may
|
|||
|
|
no doubt be very dangerous rivals to those of their neighbours. This very
|
|||
|
|
competition, however, is advantageous to the great body of the people, who
|
|||
|
|
profit greatly, besides, by the good market which the great expense of
|
|||
|
|
such a nation affords them in every other way. Private people, who want to
|
|||
|
|
make a fortune, never think of retiring to the remote and poor provinces
|
|||
|
|
of the country, but resort either to the capital, or to some of the great
|
|||
|
|
commercial towns. They know, that where little wealth circulates, there is
|
|||
|
|
little to be got; but that where a great deal is in motion, some share of
|
|||
|
|
it may fall to them. The same maxim which would in this manner direct the
|
|||
|
|
common sense of one, or ten, or twenty individuals, should regulate the
|
|||
|
|
judgment of one, or ten, or twenty millions, and should make a whole
|
|||
|
|
nation regard the riches of its neighbours, as a probable cause and
|
|||
|
|
occasion for itself to acquire riches. A nation that would enrich itself
|
|||
|
|
by foreign trade, is certainly most likely to do so, when its neighbours
|
|||
|
|
are all rich, industrious and commercial nations. A great nation,
|
|||
|
|
surrounded on all sides by wandering savages and poor barbarians, might,
|
|||
|
|
no doubt, acquire riches by the cultivation of its own lands, and by its
|
|||
|
|
own interior commerce, but not by foreign trade. It seems to have been in
|
|||
|
|
this manner that the ancient Egyptians and the modern Chinese acquired
|
|||
|
|
their great wealth. The ancient Egyptians, it is said, neglected foreign
|
|||
|
|
commerce, and the modern Chinese, it is known, hold it in the utmost
|
|||
|
|
contempt, and scarce deign to afford it the decent protection of the laws.
|
|||
|
|
The modern maxims of foreign commerce, by aiming at the impoverishment of
|
|||
|
|
all our neighbours, so far as they are capable of producing their intended
|
|||
|
|
effect, tend to render that very commerce insignificant and contemptible.
|
|||
|
|
|
|||
|
|
It is in consequence of these maxims, that the commerce between France and
|
|||
|
|
England has, in both countries, been subjected to so many discouragements
|
|||
|
|
and restraints. If those two countries, however, were to consider their
|
|||
|
|
real interest, without either mercantile jealousy or national animosity,
|
|||
|
|
the commerce of France might be more advantageous to Great Britain than
|
|||
|
|
that of any other country, and, for the same reason, that of Great Britain
|
|||
|
|
to France. France is the nearest neighbour to Great Britain. In the trade
|
|||
|
|
between the southern coast of England and the northern and north-western
|
|||
|
|
coast of France, the returns might be expected, in the same manner as in
|
|||
|
|
the inland trade, four, five, or six times in the year. The capital,
|
|||
|
|
therefore, employed in this trade could, in each of the two countries,
|
|||
|
|
keep in motion four, five, or six times the quantity of industry, and
|
|||
|
|
afford employment and subsistence to four, five, or six times the number
|
|||
|
|
of people, which all equal capital could do in the greater part of the
|
|||
|
|
other branches of foreign trade. Between the parts of France and Great
|
|||
|
|
Britain most remote from one another, the returns might be expected, at
|
|||
|
|
least, once in the year; and even this trade would so far be at least
|
|||
|
|
equally advantageous, as the greater part of the other branches of our
|
|||
|
|
foreign European trade. It would be, at least, three times more
|
|||
|
|
advantageous than the boasted trade with our North American colonies, in
|
|||
|
|
which the returns were seldom made in less than three years, frequently
|
|||
|
|
not in less than four or five years. France, besides, is supposed to
|
|||
|
|
contain 24,000,000 of inhabitants. Our North American colonies were never
|
|||
|
|
supposed to contain more than 3,000,000; and France is a much richer
|
|||
|
|
country than North America; though, on account of the more unequal
|
|||
|
|
distribution of riches, there is much more poverty and beggary in the one
|
|||
|
|
country than in the other. France, therefore, could afford a market at
|
|||
|
|
least eight times more extensive, and, on account of the superior
|
|||
|
|
frequency of the returns, four-and-twenty times more advantageous than
|
|||
|
|
that which our North American colonies ever afforded. The trade of Great
|
|||
|
|
Britain would be just as advantageous to France, and, in proportion to the
|
|||
|
|
wealth, population, and proximity of the respective countries, would have
|
|||
|
|
the same superiority over that which France carries on with her own
|
|||
|
|
colonies. Such is the very great difference between that trade which the
|
|||
|
|
wisdom of both nations has thought proper to discourage, and that which it
|
|||
|
|
has favoured the most.
|
|||
|
|
|
|||
|
|
But the very same circumstances which would have rendered an open and free
|
|||
|
|
commerce between the two countries so advantageous to both, have
|
|||
|
|
occasioned the principal obstructions to that commerce. Being neighbours,
|
|||
|
|
they are necessarily enemies, and the wealth and power of each becomes,
|
|||
|
|
upon that account, more formidable to the other; and what would increase
|
|||
|
|
the advantage of national friendship, serves only to inflame the violence
|
|||
|
|
of national animosity. They are both rich and industrious nations; and the
|
|||
|
|
merchants and manufacturers of each dread the competition of the skill and
|
|||
|
|
activity of those of the other. Mercantile jealousy is excited, and both
|
|||
|
|
inflames, and is itself inflamed, by the violence of national animosity,
|
|||
|
|
and the traders of both countries have announced, with all the passionate
|
|||
|
|
confidence of interested falsehood, the certain ruin of each, in
|
|||
|
|
consequence of that unfavourable balance of trade, which, they pretend,
|
|||
|
|
would be the infallible effect of an unrestrained commerce with the other.
|
|||
|
|
|
|||
|
|
There is no commercial country in Europe, of which the approaching ruin
|
|||
|
|
has not frequently been foretold by the pretended doctors of this system,
|
|||
|
|
from all unfavourably balance of trade. After all the anxiety, however,
|
|||
|
|
which they have excited about this, after all the vain attempts of almost
|
|||
|
|
all trading nations to turn that balance in their own favour, and against
|
|||
|
|
their neighbours, it does not appear that any one nation in Europe has
|
|||
|
|
been, in any respect, impoverished by this cause. Every town and country,
|
|||
|
|
on the contrary, in proportion as they have opened their ports to all
|
|||
|
|
nations, instead of being ruined by this free trade, as the principles of
|
|||
|
|
the commercial system would lead us to expect, have been enriched by it.
|
|||
|
|
Though there are in Europe indeed, a few towns which, in same respects,
|
|||
|
|
deserve the name of free ports, there is no country which does so.
|
|||
|
|
Holland, perhaps, approaches the nearest to this character of any, though
|
|||
|
|
still very remote from it; and Holland, it is acknowledged, not only
|
|||
|
|
derives its whole wealth, but a great part of its necessary subsistence,
|
|||
|
|
from foreign trade.
|
|||
|
|
|
|||
|
|
There is another balance, indeed, which has already been explained, very
|
|||
|
|
different from the balance of trade, and which, according as it happens to
|
|||
|
|
be either favourable or unfavourable, necessarily occasions the prosperity
|
|||
|
|
or decay of every nation. This is the balance of the annual produce and
|
|||
|
|
consumption. If the exchangeable value of the annual produce, it has
|
|||
|
|
already been observed, exceeds that of the annual consumption, the capital
|
|||
|
|
of the society must annually increase in proportion to this excess. The
|
|||
|
|
society in this case lives within its revenue; and what is annually saved
|
|||
|
|
out of its revenue, is naturally added to its capital, and employed so as
|
|||
|
|
to increase still further the annual produce. If the exchangeable value of
|
|||
|
|
the annual produce, on the contrary, fall short of the annual consumption,
|
|||
|
|
the capital of the society must annually decay in proportion to this
|
|||
|
|
deficiency. The expense of the society, in this case, exceeds its revenue,
|
|||
|
|
and necessarily encroaches upon its capital. Its capital, therefore, must
|
|||
|
|
necessarily decay, and, together with it, the exchangeable value of the
|
|||
|
|
annual produce of its industry.
|
|||
|
|
|
|||
|
|
This balance of produce and consumption is entirely different from what is
|
|||
|
|
called the balance of trade. It might take place in a nation which had no
|
|||
|
|
foreign trade, but which was entirely separated from all the world. It may
|
|||
|
|
take place in the whole globe of the earth, of which the wealth,
|
|||
|
|
population, and improvement, may be either gradually increasing or
|
|||
|
|
gradually decaying.
|
|||
|
|
|
|||
|
|
The balance of produce and consumption may be constantly in favour of a
|
|||
|
|
nation, though what is called the balance of trade be generally against
|
|||
|
|
it. A nation may import to a greater value than it exports for half a
|
|||
|
|
century, perhaps, together; the gold and silver which comes into it during
|
|||
|
|
all this time, may be all immediately sent out of it; its circulating coin
|
|||
|
|
may gradually decay, different sorts of paper money being substituted in
|
|||
|
|
its place, and even the debts, too, which it contracts in the principal
|
|||
|
|
nations with whom it deals, may be gradually increasing; and yet its real
|
|||
|
|
wealth, the exchangeable value of the annual produce of its lands and
|
|||
|
|
labour, may, during the same period, have been increasing in a much
|
|||
|
|
greater proportion. The state of our North American colonies, and of the
|
|||
|
|
trade which they carried on with Great Britain, before the commencement of
|
|||
|
|
the present disturbances, {This paragraph was written in the year 1775.}
|
|||
|
|
may serve as a proof that this is by no means an impossible supposition.
|
|||
|
|
|
|||
|
|
|
|||
|
|
## 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
|
|||
|
|
- 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
|
|||
|
|
- ancient-system-of-political-economy
|
|||
|
|
- annual-consumption-of-metals
|
|||
|
|
- annual-industry-employed-in-production
|
|||
|
|
- annual-produce-of-land-and-labour
|
|||
|
|
- 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-trade
|
|||
|
|
- 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-notes
|
|||
|
|
- 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
|
|||
|
|
- bullion
|
|||
|
|
- butcher-trade
|
|||
|
|
- bye-laws
|
|||
|
|
- canal-communication
|
|||
|
|
- capital
|
|||
|
|
- capital-accumulation
|
|||
|
|
- capital-employed
|
|||
|
|
- capital-employment-advantages
|
|||
|
|
- capital-employment-effects
|
|||
|
|
- capital-employment-security-gradient
|
|||
|
|
- 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
|
|||
|
|
- coal-heaver
|
|||
|
|
- coal-price
|
|||
|
|
- coarser-and-finer-materials
|
|||
|
|
- coined-money
|
|||
|
|
- collier
|
|||
|
|
- colony-prosperity
|
|||
|
|
- combination-of-masters
|
|||
|
|
- combination-of-workmen
|
|||
|
|
- command-over-labour
|
|||
|
|
- commerce-between-town-and-country
|
|||
|
|
- commerce-of-towns
|
|||
|
|
- commercial-development-sequence-inversion
|
|||
|
|
- commercial-family-duration-pattern
|
|||
|
|
- commercial-hospitality-contrast
|
|||
|
|
- commercial-independence-effect
|
|||
|
|
- commercial-interactions
|
|||
|
|
- commercial-or-mercantile-system
|
|||
|
|
- commercial-order-and-government-introduction
|
|||
|
|
- commercial-society
|
|||
|
|
- commercial-society-emergence
|
|||
|
|
- 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
|
|||
|
|
- 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
|
|||
|
|
- demand-for-labour
|
|||
|
|
- demesne
|
|||
|
|
- diamond-buckles-metaphor
|
|||
|
|
- discount-of-bills
|
|||
|
|
- distant-country-subsistence
|
|||
|
|
- distant-market-manufacturing
|
|||
|
|
- distant-sale-manufacturing
|
|||
|
|
- division-of-labour
|
|||
|
|
- division-of-labour-advantage
|
|||
|
|
- domestic-industry-protection
|
|||
|
|
- domestic-market-size-effects
|
|||
|
|
- double-coincidence-of-wants
|
|||
|
|
- drawing-and-redrawing
|
|||
|
|
- dwelling-house-distinction
|
|||
|
|
- early-and-rude-state-of-society
|
|||
|
|
- early-navigation-advantages
|
|||
|
|
- economic-accessibility-determinants
|
|||
|
|
- economic-accessibility-gradient
|
|||
|
|
- 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-isolation-effects
|
|||
|
|
- economic-opportunity-cost
|
|||
|
|
- economic-opportunity-geography
|
|||
|
|
- economic-prosperity-symptoms
|
|||
|
|
- economic-spatial-inequality
|
|||
|
|
- economic-spatial-organisation
|
|||
|
|
- 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-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-effectiveness
|
|||
|
|
- 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-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-systems-distinction
|
|||
|
|
- effect-of-prohibition-on-gold-and-silver-export
|
|||
|
|
- effectual-demand
|
|||
|
|
- ejectment-action
|
|||
|
|
- encroachment-upon-capital
|
|||
|
|
- engrossers-and-forestallers
|
|||
|
|
- entail
|
|||
|
|
- equal-profit-employment-choice
|
|||
|
|
- exchange
|
|||
|
|
- exchange-rate-mechanism
|
|||
|
|
- exchangeable-value
|
|||
|
|
- exchequer
|
|||
|
|
- exclusive-corporation
|
|||
|
|
- export-bounty
|
|||
|
|
- exportation-bounty
|
|||
|
|
- exportation-of-gold-and-silver-as-effect-of-declension
|
|||
|
|
- extraordinary-profits
|
|||
|
|
- fairs-and-markets
|
|||
|
|
- farm-rent
|
|||
|
|
- farmer
|
|||
|
|
- farmers-capital
|
|||
|
|
- farmers-profit
|
|||
|
|
- favour
|
|||
|
|
- feudal-anarchy
|
|||
|
|
- feudal-government-effects
|
|||
|
|
- fixed-capital
|
|||
|
|
- flax-grower
|
|||
|
|
- fluctuations-in-value-of-gold-and-silver
|
|||
|
|
- foreign-capital-exportation
|
|||
|
|
- foreign-commerce-manufactures-birth
|
|||
|
|
- foreign-corn-importation-effects
|
|||
|
|
- foreign-trade
|
|||
|
|
- foreign-trade-enrichment-mechanism
|
|||
|
|
- foreign-trade-of-consumption
|
|||
|
|
- four-methods-of-employing-capital
|
|||
|
|
- free-burgh
|
|||
|
|
- freeholder-yeomanry
|
|||
|
|
- 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-market-monopoly
|
|||
|
|
- home-trade
|
|||
|
|
- hop-garden
|
|||
|
|
- human-folly-injustice-exposure
|
|||
|
|
- human-nature
|
|||
|
|
- idle-consumers
|
|||
|
|
- immediate-consumption
|
|||
|
|
- import-restraint
|
|||
|
|
- improved-farm-advantages
|
|||
|
|
- improved-land
|
|||
|
|
- improvement-of-the-country
|
|||
|
|
- inclosure
|
|||
|
|
- increase-of-money-as-effect-of-prosperity
|
|||
|
|
- 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
|
|||
|
|
- journeymen
|
|||
|
|
- judgment-in-labour-application
|
|||
|
|
- kelp
|
|||
|
|
- kitchen-garden
|
|||
|
|
- labour-of-inspection-and-direction
|
|||
|
|
- labouring-cattle
|
|||
|
|
- labouring-poor
|
|||
|
|
- land-carriage
|
|||
|
|
- land-mines-and-fisheries
|
|||
|
|
- landlord
|
|||
|
|
- landlords-share
|
|||
|
|
- law-of-primogeniture
|
|||
|
|
- legal-rate-of-interest
|
|||
|
|
- legal-tender
|
|||
|
|
- licence-to-gather-natural-produce
|
|||
|
|
- lowest-rate-of-wages
|
|||
|
|
- machinery-invention
|
|||
|
|
- 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-mechanism
|
|||
|
|
- market-price-mechanism-for-rude-produce
|
|||
|
|
- 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-town-economy
|
|||
|
|
- market-town-formation
|
|||
|
|
- masquerade-dress-trade
|
|||
|
|
- master-artificer
|
|||
|
|
- master-manufacturer
|
|||
|
|
- materials-and-subsistence
|
|||
|
|
- measure-of-exchangeable-value
|
|||
|
|
- mediterranean-civilisation-pattern
|
|||
|
|
- menial-servants
|
|||
|
|
- merchant
|
|||
|
|
- merchant-capital
|
|||
|
|
- merchant-country-gentleman-transition
|
|||
|
|
- metal-currency
|
|||
|
|
- metayer
|
|||
|
|
- military-assistance
|
|||
|
|
- military-discipline
|
|||
|
|
- military-employment
|
|||
|
|
- mine-fertility
|
|||
|
|
- mine-situation
|
|||
|
|
- mint
|
|||
|
|
- mint-price
|
|||
|
|
- modern-states-inversion
|
|||
|
|
- modern-system-of-political-economy
|
|||
|
|
- modes-of-expense-affecting-public-opulence
|
|||
|
|
- money
|
|||
|
|
- money-as-instrument-of-commerce
|
|||
|
|
- money-rent
|
|||
|
|
- moneys-worth
|
|||
|
|
- monied-interest
|
|||
|
|
- monopoly-effects-on-market-price
|
|||
|
|
- monopoly-effects-on-prices
|
|||
|
|
- monopoly-price-of-land
|
|||
|
|
- mutual-gain-reciprocity
|
|||
|
|
- mutual-good-offices
|
|||
|
|
- mutual-servitude
|
|||
|
|
- national-animosity-in-trade-policy
|
|||
|
|
- national-capital-composition
|
|||
|
|
- national-economic-identity
|
|||
|
|
- natural-advantages-in-trade
|
|||
|
|
- natural-complement-of-riches
|
|||
|
|
- natural-course-of-capital-employment
|
|||
|
|
- natural-course-of-things
|
|||
|
|
- natural-development-sequence
|
|||
|
|
- natural-employment-of-capital
|
|||
|
|
- natural-inclinations-thwarting
|
|||
|
|
- natural-liberty-in-banking
|
|||
|
|
- natural-liberty-in-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
|
|||
|
|
- neat-revenue
|
|||
|
|
- necessity
|
|||
|
|
- nominal-measure-of-value
|
|||
|
|
- nominal-price-of-commodities
|
|||
|
|
- non-standard-metal
|
|||
|
|
- occasional-and-temporary-market-fluctuations
|
|||
|
|
- ordinary-market-price-of-land
|
|||
|
|
- ordinary-rates-of-wages-profit-and-rent
|
|||
|
|
- ordinary-state-of-employments
|
|||
|
|
- original-destination-of-man
|
|||
|
|
- original-government-manners
|
|||
|
|
- overstocked-market-conditions
|
|||
|
|
- paper-money
|
|||
|
|
- pasture-land
|
|||
|
|
- payment-in-kind
|
|||
|
|
- perfect-liberty-in-trade
|
|||
|
|
- permanent-market-price-enhancements
|
|||
|
|
- perpetual-fund-for-maintenance-of-labour
|
|||
|
|
- piece-work-wages
|
|||
|
|
- pin-maker-trade
|
|||
|
|
- planter-independence
|
|||
|
|
- plate-household-silver
|
|||
|
|
- poacher
|
|||
|
|
- 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-misconduct-versus-public-prodigality
|
|||
|
|
- prodigals
|
|||
|
|
- prodigals-and-projectors
|
|||
|
|
- 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
|
|||
|
|
- promissory-notes
|
|||
|
|
- proportion-between-metals
|
|||
|
|
- proportion-between-productive-and-unproductive-hands
|
|||
|
|
- prudent-family-maxim
|
|||
|
|
- public-education-of-professionals
|
|||
|
|
- public-executioner
|
|||
|
|
- public-fiars
|
|||
|
|
- public-good-versus-private-interest
|
|||
|
|
- public-law-on-coinage
|
|||
|
|
- public-lottery
|
|||
|
|
- public-mourning-effects
|
|||
|
|
- public-registers-of-manufactures
|
|||
|
|
- public-services-funding
|
|||
|
|
- purveyance
|
|||
|
|
- quantity-of-labour
|
|||
|
|
- rate-of-interest
|
|||
|
|
- rate-of-profit
|
|||
|
|
- real-measure-of-value
|
|||
|
|
- real-price-of-commodities
|
|||
|
|
- real-value-of-corn-rent
|
|||
|
|
- regulated-proportion
|
|||
|
|
- religious-occupational-restrictions
|
|||
|
|
- rent-of-land
|
|||
|
|
- 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
|
|||
|
|
- rude-produce
|
|||
|
|
- rural-urban-reciprocity
|
|||
|
|
- scarcity-of-hands
|
|||
|
|
- sea-coast-development
|
|||
|
|
- 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-of-precious-metals
|
|||
|
|
- smuggling-trade
|
|||
|
|
- sober-people
|
|||
|
|
- societys-general-stock
|
|||
|
|
- sovereign-parsimony
|
|||
|
|
- 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
|
|||
|
|
- 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
|
|||
|
|
- taille
|
|||
|
|
- tale
|
|||
|
|
- temporary-price-of-corn
|
|||
|
|
- 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
|
|||
|
|
- town-country-dependency
|
|||
|
|
- town-market-function
|
|||
|
|
- town-reproduction-impossibility
|
|||
|
|
- trade-balance-mechanism
|
|||
|
|
- trade-capital
|
|||
|
|
- trade-encouragement
|
|||
|
|
- trade-route-dependency
|
|||
|
|
- transportation-cost-differential
|
|||
|
|
- transportation-infrastructure-importance
|
|||
|
|
- transportation-mode-economic-effects
|
|||
|
|
- treasure-accumulation
|
|||
|
|
- treasure-trove
|
|||
|
|
- treaty
|
|||
|
|
- truck
|
|||
|
|
- two-branches-of-circulation
|
|||
|
|
- uncultivated-land-availability
|
|||
|
|
- unimproved-land
|
|||
|
|
- 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
|
|||
|
|
- 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
|
|||
|
|
|
|||
|
|
---
|
|||
|
|
```
|