Chapter Twelve: All Classes and Individuals in a State subsist or are enriched at the Expense of the Proprietors of Land

Chapter Twelve

All Classes and Individuals in a State Subsist or Grow Rich at the Expense of the Property Owners

Abstract: Cantillon develops a circular-flow model of the economy that shows the distribution of farm production between property owners, farmers, and workers. Farm production is exchanged for the goods and services produced in the cities by entrepreneurs and artisans. While the property owners are “independent,” the model demonstrates the mutual interdependence between all the classes of people that Adam Smith dubbed the “invisible hand” in The Theory of Moral Sentiments (1759).

THERE ARE NONE BUT THE PRINCE and the property owners who live independent; all other classes and inhabitants are hired or are entrepreneurs. The proof and detail of this will be developed in the next chapter.

If the prince and property owners close their estates and will not allow them to be cultivated, it is clear that there would neither be food nor clothing for any of the inhabitants of the state. Consequently, all the individuals of the state are supported, not only by the product of the land that is cultivated for the benefit of the owners, but also at the expense of these same owners from whose property they derive all that they have.

The farmers generally have two-thirds of the product of the land: one for their expenses and the maintenance of their assistants, the other for the profit of their enterprise. On these two-thirds, the farmer generally provides, directly or indirectly, subsistence for all those who live in the country, and also for artisans or entrepreneurs in the city, because of the goods from the city that are consumed in the countryside.

The owner usually has one-third of the product of his land, and on this third, he maintains all the artisans and others, whom he employs in the city as well. This often includes those who bring the goods from the countryside to the city.

It is generally assumed that one-half of the inhabitants of a state subsist and reside in cities, and the other half live in the country. That being the case, the farmer, who has two-thirds or four-sixths of the product of the land, pays directly or indirectly one-sixth to the city residents in exchange for the goods he acquires from them. This sixth, with the one-third or two-sixths that the owner spends in the city, makes three-sixths or one-half of the products of the land. This calculation is only to convey a general idea of the proportion; but in fact, if half of the inhabitants live in the cities, they consume more than half of the land’s product. They live better than those who reside in the countryside and consume more of the production of the land because all artisans and dependents of the property owners are better maintained than the assistants and dependents of the farmers.

In any event, if we examine the means by which an inhabitant is supported, one will always find, when going back to the source, that their income comes from the owner’s land, either in the two-thirds of the product reserved by the farmer, or the one-third that remains with the owner.

If a property owner only had enough land for one farmer, the farmer would get a better living out of it than the owner would. However, the nobles and large property owners in the cities sometimes have several hundred farmers and thus there are very few owners in proportion to all the inhabitants of the state.

It is true, that there are often several entrepreneurs and artisans in the large cities who live by foreign trade, and therefore, at the expense of foreign landowners. But at present, I am only considering a state with regard to its production and with its own industry, in order to avoid cluttering my argument with accidental circumstances.²⁹

The land belongs to the owners but would be useless to them if it were not cultivated. The more labor is expended on it, other things being equal,³⁰ the more it produces; and the more its products are refined, other things being equal, the more value they have as goods. Therefore, the owners need the inhabitants as they need the owners.³¹ However, in this economy, it is the property owners who have the control and direction of the landed capital, to give the most advantageous turn and movement to the whole. Also, everything in a state depends mainly on the moods, modes and ways of life of the property owners, as I will try to clearly show in the remainder of this essay.

Thus, need and necessity enable farmers, artisans of every kind, merchants, officers, soldiers, sailors, domestic servants and all the other classes who work or are employed in the state, to exist. All these working people serve not only the prince and the property owners, but each other as well. Many of them do not work directly for the property owners, and so it is not seen that they subsist on the capital of these proprietors and live at their expense. As for those whose professions are not essential, like dancers, actors, painters, musicians, etc., they are only supported in the state for pleasure or ornamentation, and their number is always very small compared to the population.

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²⁹ Here Cantillon employs the “closed economy” assumption, or condition, for his model.

³⁰ Here Cantillon employs ceteris paribus conditions to his model.

³¹ This mutual dependence between the wealthy property owners and labor is what Adam Smith refers to as “the invisible hand” in The Theory of Moral Sentiments.