This section is from the "The Science Of Wealth" book, by Amasa Walker.
But there is more to come. We said, "take the same money." What money? Whose money? Now, in arguments for govermental luxury, it is always assumed that the money is in the treasury. But how came the money into the public coffers? Who furnishes the money? The sober, steady industries of the country. The money to make King William's tower came from Leeds and Sheffield and Manchester. It encouraged one class of artisans. True. Whom did it discourage? A class that is always out of sight in such reckonings, — the class that pays the taxes.
Then, so far, it only amounts to changing the capital of the country from one hand to another; employing one class by turning off another; a change that is never made without distress and loss.
There is still more to be said. If the wealth had remained in the hands of the manufacturer, say, it would have been capital, and supported workmen this year. So has the tower. But, in the latter use, next year it will be no longer reproductive; while, in cotton-spinning or land-draining, it would grow with every day, and furnish unfailing employment for labor. A thousand dollars spent in luxury will pay a thousand dollars of wages (less certain little items). A thousand dollars employed as capital will, in ten years, pay twenty thousand dollars of wages. Such is the difference in results.
A similar instance is that of a man expending ten thousand dollars on an enlargement of his house for purposes of grandeur or enjoyment, or laying it out in draining and improving fifty acres of land. In either case, he pays a certain amount of wages; but, in the latter, he has added a permanent value to the country; increasing his own annual income, and affording the means of employing a certain amount of labor to the end of time.
Wealth, employed as capital, is an annuity made out in the name of the laborer, and good for life.
There is no possible case in which the employment of wealth, for purposes of luxury, as opposed to reproduction, can be said directly to advantage industry. It is only the fierce blaze of the burning house, at which a few may be for a moment warmed, but which goes out, leaving desolation where was habitation and home.
2d, Do luxuries indirectly encourage industry? Here we must turn sharply on our previous decision, and see a further meaning in luxurious consumption than first appeared. Unquestionably, a wholesome luxury is one of the most important principles of production. What is it that kindles the desire of acquisition; that keeps the hand strong to labor? Is it not the hope to spend? For what else, the wretched miser excepted, do men toil early and late? It is the promise of future enjoyments that calls out half the work of the world. It is this that makes the difference between nations. No man passes by the abode of leisure and refinement without receiving an incitement to effort.
There is one practical limitation of this principle, which is of great social and economical importance. It arises from the relative position of those who do, and those who as yet cannot, indulge in luxurious consumption. If a few are very rich, and the many very poor, the expenditures of the former have very little effect on the condition of the latter. Since these cannot aspire to the enjoyment of their superiors, their ambition, instead of being excited, is depressed. If, on the contrary, the interval between the classes is narrow, and the differences moderate, the luxuries of the rich exert strong and increasing desires in those who are less wealthy. These desires create wealth. It is not the gifts of nature, nor the constraints of law, that heap up the stores of value. It is the force with which man moves to production, wholly determined, as that is, by his economic desires. The luxury of European courts has no elevating influence upon the masses: quite otherwise. Robbed to furnish the means of others, they are hopeless of ever attaining to such fortune themselves. But where the grades of society are fixed only by differences of natural endowment, and so are moderate and regular, rising by easy steps, the entire population becomes inspired with the purpose of reaching a higher position. In such a state, the imagination can hardly run ahead of wealth.
We have, then, attained the principle, that luxurious consumption, while it directly gives no help to industry, but rather spends in one hour's enjoyment the provision of months or years, may yet, by its influence on man's desires, create a productive force which shall make its extravagance seem economy, its waste appear frugality itself.
But this is only true of harmonious, temperate, and well-proportioned luxury. There are indulgences, great courses of indulgence, which, while they excite momentarily to production for the means of gratification, do yet, by their certain and inevitable effect on the physical and mental powers of the individual, by their demoralizing and perverting influence on the community, prostrate industry, and overturn the foundations of the state. Many as are the unfortunate possibilities which attend upon production and distribution, they are all inferior in interest to the momentous decisions of consumption; and here in luxury, as we find the spring of all beneficent activity, we also find the root of all economic evils. So vast and so important are the issues here involved, that many of them are taken away from the political economist by the statesman or the moralist. We do not propose to follow these principles into all their results; content with only indicating their starting-point and direction.
Such is luxurious consumption, in its definition and its general principles. We shall further discuss the degree to which it is, or may be, carried in any community.