Sir William Petty
In this short history of agricultural surplus, Sir William Petty plays an important role. Petty underlines the use-value aspect of goods and singles out the peculiar role of the agricultural sector, which, by producing a surplus of necessaries, provides the basis for the development of both the population and of manufacturing.
In a famous example, Petty assumes that 100 men produce food and clothing for a thousand. In his 1662 Treatise of Taxes and Contributions, Petty (1662, 30: emphasis and bold added) writes the following:If there be 1000. men in a Territory, and if 100. of these can raise necessary food and raiment for the whole 1000. If 200. more make as much commodities, as other Nations will give either their commodities or money for, and if 400. more be employed in the ornaments, pleasure, and magnificence of the whole; if there be 200. Governors, Divines, Lawyers, Physicians, Merchants and Retailers, making in all 900. the question is, since there is food enough for this supernumerary 100. also, how they should come by it?
Leave aside for the moment Petty’s question, which is emphasized by the second italics. Agriculture maintains all other economic activities, because its output is larger than the inputs required in its own production. Agricultural surplus implies that some individuals produce food and other necessaries in excess of their own needs, and therefore there is subsistence for others, a fact that allows manufacture, trade and other activities to arise. The very existence of activities different from the agricultural ones is proof that there is a surplus in agriculture, since this sector maintains all other economic activities. It is thanks to the surplus of necessaries that societies can diversify their activities and the structure of employment.
Petty’s other important notion is that of social division of labor, which is quite obviously a twin concept to that of an agricultural surplus.
The very question at the end of the previous passage is an example of the way in which Petty tries to analyze contemporary society—everyone must have a role in it, and her/his entitlement to receive part of the produce must bear some sort of relation to this role. Hence, how the 100 supernumerary “should come by it?” How can they survive? In which way might the extra subsistence, on top of that appropriated by the other 900 men, reach them? What is the type of mechanism that allows them to receive the available food and raiment? Petty indicates five possible, and not very pleasant, options: “begging, [...] stealing, [...] to starve, [...] be put to death, [....] be given away to another Nation” (ibid., 30).Of course, the last option reminds us of migration flows, a growing phenomenon that in less than 20 years has brought international remittances to be three times larger than international aid (see Capelli and Vaggi, 2016, 226). The question that closes the quote above indicates that in the type of society Petty has in mind, people are entitled to subsistence depending on their role and function inside the social organization. Petty does not progress to explicitly saying that individuals will share subsistence according to their contribution to national wealth, in a sort of functional distribution of income approach, but the existence of the question poses a very modern problem about the production and distribution of wealth.
The surplus of the economy springs out of the primary sector, but it is the manufacturing sector that can take advantage of the technical division of labor. This is another important element in the process of modification of the mercantilist theory of wealth.3 Petty (1676, 260) believes that there is a type of technological division of labor that allows for a reduction in the cost of production of commodities: “for as Cloth must be cheaper made, when one Cards, another Spins, another Weaves, another Draws, another Dresses, another Presses and Packs; than when all the Operations above-mentioned, were clumsily performed by the same hand.”
This passage anticipates by one century the Smithian theory of wealth and the famous example of the 18 operations of the “trade of the pin-maker” in the opening chapter of the Wealth of Nations (see Smith, 1776, I.i.3).
Lower production costs lead to lower prices, as described in the famous example of watches in the 1682 work Another Essay on Political Arithmetick (see Roncaglia, 1977, 93-94).Petty links up the way in which commodities are produced to their value. In the Treatise of Taxes and Contributions, he has the famous sentence about labor and land being the father and mother of wealth (see Petty, 1662, 68); hence, “all things ought to be valued by two natural Denominations, which is Land and Labor” (ibid., 44).
Later on in the Treatise, Petty seems to highlight a sort of labor theory of value when he underlines that “dearness and cheapness” depend “upon the few or more hands requisite” to produce necessaries (ibid., 90).4
Notwithstanding all his valuable and very modern insights into the production process, Petty does not produce a theory of national wealth that could be an alternative to the “balance of trade” one.
He discusses the technological division of labor but does not give any explanation of how it is possible to achieve that surplus in the production of “food and raiment,” which is at the basis of the organization of society.
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