----------------------- PART IV. CONSUMPTION is of two kinds—productive and unproductive. The object of the one is the restoration, with increase, in some new form, of that which is consumed. The object of the other is the enjoyment of some good through the sacrifice of that which is consumed. That which is consumed productively is capital, re-appearing for future use. That which is consumed unproductively ceases to be capital, or any thing else: it is wholly lost. Such loss is desirable, or the contrary, in proportion as the happiness resulting from the sacrifice exceeds or falls short of the happiness belonging to the continued possession of the consumable commodity. The total of what is produced is called the gross produce. That which remains, after replacing the capital consumed, is called the net produce. While a man produces only that which he himself consumes, there is no demand and supply. If a man produces more of one thing than he consumes, it is for the sake of obtaining something which another man produces, over and above what he consumes. Each brings the two requisites of a demand,—viz., the wish for a supply, and a commodity wherewith to obtain it. This commodity, which is the instrument of demand, is, at the same time, the instrument of supply. Though the respective commodities of no two producers may be exactly suitable to their respective wishes, or equivalent in amount, yet, as every man’s instrument of demand and supply is identical, the aggregate demand of society must be precisely equal to its supply. In other words, a general glut is impossible. A partial glut is an evil which induces its own remedy; and the more quickly the greater the evil; since, the aggregate demand and supply being always equal, a superabundance of one commodity testifies to the deficiency of another; and, all exchangers being anxious to exchange the deficient article for that which is superabundant, the production of the former will be quickened, and that of the latter slackened. A new creation of capital, employed in the production of the deficient commodity, may thus remedy a glut. A new creation of capital is always a benefit to society, by constituting a new demand. It follows that an unproductive consumption of capital is an injury to society, by contracting the demand. In other words, an expenditure which avoidably exceeds the revenue is a social crime. All interference which perplexes the calculations of producers, and thus causes the danger of a glut, is also a social crime. ------- It is necessary to the security and advancement of a community that there should be an expenditure of a portion of its wealth for purposes of defence, of public order, and of social improvement.