WHEN Carlyle wrote his 'Past and Present' and his 'Latter Day Pamphlets' about the middle of the last century, the Orthodox Economists had already succeeded in persuading the Politicians, much to their relief, that the low wages, poverty, and periodical destitution of the working classes were an economic necessity, a piece of pure fate, as inexorable as death; and that the cause of it all was that wages being paid out of capital, and capital being fixed in amount, the share of it that could fall to the working man was a simple matter of arithmetic. You divided the amount of capital by the number of working men whom it had to feed, as a mother divides a loaf among her children; and just as the size of the loaf and the number of the children measure the size of the slice that falls to each, whereby if some received a bigger slice the rest would have to content themselves with a smaller, so was it with the wages of the working men. If some by their superior skill or the influence of their trades-unions received more wages, others they said would have to be content with less; and neither gods nor men, political agitators, parliament, nor philanthropists could alter it.

It was their old doctrine of the stick, with a piece cut off the end in the shape of money and food for the payment of the workmen; and if the workmen insisted on demanding more than this, let them look to it, for less would be carried forward as savings, and the wealth of the nation would in consequence decline. And the worst of it was that although the workmen were inclined to kick their foot through this piece of cheap and easy economic arithmetic, the great mass of intelligent people, - statesmen, economists, publicists, stump orators and all, - secretly believed in it, and did not see how it could be gainsaid. But Carlyle, in order to give point to his gibes both at the politicians and economists, wanted to know why it was that at that very time when the wealth of the country had been for a long series of years increasing 'by leaps and bounds,' and the warehouses and workshops of the North of England and the Midlands had been supplying the whole world with their woollens, their calicoes, their cutlery, their engines, their iron and coal and what not, - why it was that in a temporary glut of these commodities the great masses of the people over large areas, and especially in the streets and alleys of these very manufacturing towns, were on the verge of starvation; their bare backs showing through their ragged cotton shirts, in front of the warehouses where cotton shirts lay piled in stacks to the ceiling unsold, because they had not the wherewithal to pay for them.

The question, it is evident, is one which concerns the distribution of wealth rather than its production; and as the answer to it is as much an affair of Politics as it is of Political Economy, I shall postpone its discussion until it reappears in its proper place later on in this volume. What we have to consider specially here is a somewhat different question, and concerns rather my own position than that of either the Politicians or the Orthodox Economists. The question put by Carlyle was mainly a political one, and in effect was; - How could so many people be starving and shirtless when the wealth of the country was so great? Ours is a purely economic one, and is; - How, if our doctrine be true that production must always keep time and pace with consumption, could wealth have so accumulated as to make the nation a supremely rich nation when the consumers of that nation, even when in full work, could not from the lowness of their wages carry off more than a fraction of the consumable wealth that was continuously being produced and reproduced? How, in a word, could home production have outrun so far home consumption, if by our hypothesis production must be limited by consumption!

Now.the answer to this is so simple that it seems almost incredible that anyone could have missed it. It was simply due, as every business man knows, to the enormous extent of the foreign market for English goods, over and above that of the home market. But the Orthodox Economists had expressly ruled out the extent of the market for consumption as a factor having any influence on the increase of the wealth of a nation, - as we saw from the quotations from John Stuart Mill on this head in a previous chapter, - while everywhere Adam Smith makes the same assumption. And the reason they ruled it out was, that as the production of wealth was limited by capital, and the wages for its consumption were paid out of capital, whatever was taken out of capital to supply the consumption of a foreign market, must necessarily be withdrawn from the capital engaged in supplying the home market; so that no extension of the foreign market could by any possibility increase the wealth of the nation as a whole - a prime fallacy drawn from the original datum of their Science of a fixed and rigid rod of capital from which if more were cut off for one purpose so much the less would be available for another.

But if our symbol of the Wheel is the true datum for the solution of each and every problem of political economy, the mechanism by which the vast extension of the foreign market so enormously increased the wealth of England in the early years of the last century, in spite of the limited home consumption necessitated by the low wages of the great masses of the people, is quite simple. It consisted, in a word, in attaching the national wheel of wealth to a number of lesser wheels representing the other nations of the world, by means of belts thrown across them as it were (as we see in the machinery of a factory), so that the consumption sides of these wheels formed what was practically one mammoth wheel, with England occupying the productive side for the time being, and all the rest of the nations taken together its consumption side. In this way the stimulus given to the productive side of the English wheel by this enormous demand for foreign consumption was so great as to tax it to the utmost to keep pace with it.