Front Page Titles (by Subject) chapter vii: On the Immediate Causes of the Progress of Wealth - The Works and Correspondence of David Ricardo, Vol. 2 Notes on Malthus
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chapter vii: On the Immediate Causes of the Progress of Wealth - David Ricardo, The Works and Correspondence of David Ricardo, Vol. 2 Notes on Malthus 
The Works and Correspondence of David Ricardo, ed. Piero Sraffa with the Collaboration of M.H. Dobb (Indianapolis: Liberty Fund, 2005). Vol. 2 Notes on Malthus.
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First published by Cambridge University Press in 1951. Copyright 1951, 1952, 1955, 1973 by the Royal Economic Society. This edition of The Works and Correspondence of David Ricardo is published by Liberty Fund, Inc., under license from the Royal Economic Society.
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The line—man.M. Say objects to this division,1 but I think there is real use in dividing our enquiries about2 those material objects which are capable of accumulation, and definite valuation, from those which rarely admit of such processes. Mr. Malthus’ definition of wealth has in it nothing objectionable; he states it to be those material objects, which are necessary, useful, or agreeable, to mankind.
Secondly it is stated by A. Smith &c. &c.
This is an important admission from Mr. Malthus, and will be found to be at variance with some of the doctrines which he afterwards maintains.
If in given periods &c. &c.This also is most true and very important to be remembered.
Upon this principle the labours of agriculture &c.
It is not true of any disposeable labour, that it would be most productive of value in agriculture; because it would be employed on land for which no rent would be paid; and consequently it would only return a value equal to the value of the labour employed, and of the profits of the capital1 engaged; and this is what any other capital however employed would do.
This mode of &c.The premises being unfounded, with regard to agriculture, so is the conclusion. Neither Mr. Malthus, nor Adam Smith, have yet shown “the natural pre-eminence of Agriculture”, “in the scale of productiveness.”
Agricultural labour would stand in the first rank &c.I shall have other opportunities of examining the soundness of this classification. At present, I shall only say, that men are happy in proportion as they have an abundance of the commodities they want. If it were the abundance of corn, and the facility with which it was obtained, which gave it the pre-eminence contended for, I should agree to Mr. M.’s conclusion, but the contrary is the fact. Why does the value of corn afford a rent? and why does that rent rise from time to time? because corn rises as it becomes more difficult to produce it. Increase the difficulty, and the value of corn, as well as of rent, rise still higher. Now unless this peculiar difficulty of obtaining, in the required abundance, a commodity we want, be an advantage, I can see no just reason for the classification adopted. If our supply of coal to accommodate an increasing demand were obtained with more and more labour, coal would rise in value, and many mines would afford a great increase of rent, as well as the usual profits of stock. Would this entitle coal, and the employments connected with it, to any particular pre-eminence? Coals would have a greater value, but it would be from scarcity:—would it not be better to have coals of less value, and in greater plenty? I ask then whether it would not also be very desirable to have corn of less value, and in greater abundance? If Mr. Malthus answers, yes, rent is gone, and the pre-eminence he contends for is gone. If he answer, no, I should like to have some better proofs of the pre-eminence he contends for.1
Each commodity &c.In all that Mr. M. has yet said about exchangeable value, it appears to depend a great deal on the wants of mankind, and the relative estimation in which they hold commodities. This would be true if men from various countries were to meet in a fair, with a variety of productions, and each with a separate commodity, undisturbed by the competition of any other seller. Commodities, under such circumstances, would be bought and sold according to the relative wants of those attending the fair—but when the wants of society are well known, when there are hundreds of competitors who are willing to satisfy those wants, on the condition only that they shall have the known and usual profits, there can be no such rule for regulating the value of commodities.
In such a fair as I have supposed, a man might be willing to give a pound of gold, for a pound of iron, knowing the uses of the latter metal; but when competition freely operated, he could not give that value for iron, and why? because iron would infallibly sink to its cost of production—cost of production being the pivot about which all market price moves.
It is very justly observed &c. &c.I cannot agree with Adam Smith, or with Mr. Malthus, that it is the nominal value of goods, or their prices only, which enter into the consideration of the merchant. He has clearly nothing to do with the value of the necessaries and conveniences of life in Bengal, when he purchases Muslin there, with a view to sell them in England; but as he must pay for his goods, either in money, or in goods, and expects to sell them with a profit in money, or in goods, he can not be indifferent to the real value of the medium in which his profits, as well as the value of the goods, are to be realised.1
It is quite obvious &c. &c.It is undoubtedly true that by hearing simply that a king possessed at some former time £400,000 a year, we should be quite at a loss to know whether the labourers in the country were starving or living in great plenty. It might be very proper in order to ascertain the real power of this monarch, to inquire what the price of corn and labour was in the country at such time. But having done this, it would be quite wrong to say we had found out what the real value of that king’s revenue was. We are told by Humbold, and the fact is a good deal insisted on by Mr. Malthus, that in South America, on a given portion of land with a given1 quantity of labour 2 times the quantity of human sustenance can be obtained than from the same quantity of land and with the same quantity of labour3 in Europe.
A king then in that country might probably with the labour of one thousand men, employed in Agriculture, support an army there 10 times greater than could be supported4 by a king here having the same number of men at his disposal to provide necessaries. Would he therefore be said to have a revenue of 10 times the value5 ? Mr. Malthus would answer, yes; because he estimates the real value of a revenue by the number of men’s labour you are enabled to command with it.
In money value their revenues might be nearly equal,— they might be nearly equal if estimated in iron, cloth, tea, sugar and any other commodity, but in the power of commanding labour the American Monarch might have a very decided superiority. Now to what would this be owing? to the very low value of labour in America—the revenue of the two kings would in my opinion be nearly equal, but in the expenditure of these equal revenues, a great deal of labour, which was cheap, could be obtained by one, a small quantity of labour, which was dear, could be got by the other.
Mr. Malthus justly complains of gold and silver as being variable commodities, and therefore not fit for a measure of real value, for times distant from each other. What we want is a standard measure of value which shall be itself invariable, and therefore shall accurately measure the variations6 of other things.
And on what does Mr. Malthus fix as an approximation to this standard?
The value of labour. A commodity shall be said to rise or fall accordingly as it can command more or less labour. Mr. Malthus then claims for his standard7 measure invariability! No such thing; he acknowledges that it is subject to the same contingencies and variations as all other things. Why then fix on it? It may be very useful to ascertain from time to time the power of any given revenue to command labour, but why select a commodity that is confessedly variable for a standard measure of value? I can see no reason given but this because “it has been already adopted as the most usual and the most useful.” If this be true we have still a right to reject it if it answer not the end for which it was proposed.
Whatever commodity any man selects as a measure of real value, has no other title for adoption, but its being a less variable commodity than any other, and therefore if after a time another commodity possessing this quality in a superior degree be discovered, that ought to be the standard adopted.1
Whoever then proposes a measure of real value is bound to shew that the commodity he selects is the least variable of any known.
Does Mr. Malthus comply with this condition?
In no respect whatever. He does not even acknowledge that invariability is the essential quality of a measure of real value, for he says a measure of real value implies a certain2 quantity of the necessaries and conveniences of life, acknow-ledging that these necessaries and conveniences of life are as variable as any of the commodities whose value they are selected to measure. A piece of silk is worth a quarter of corn, and it becomes worth two quarters of corn—it has doubled in real value says Mr. Malthus—but may not corn have fallen to half its former value, or is it invariable?
It is not invariable answers Mr. Malthus and may have fallen to half its former value. But if that has been the case in the instance mentioned silk has not risen in value—why then should you say it has? the two opinions are not consistent, you must claim invariability for your standard, or abandon it as a measure of real value.
Two commodities are exchangeable for each other—one commands in the market a certain quantity of the other. All at once they both vary in value as compared with all other things, and with each other. With one I can obtain a less quantity than before of iron, tea, sugar, 3 with the other I can obtain a greater quantity of these commodities. Estimated in one of these commodities therefore all other things will appear to have fallen, estimated in the other they will appear to have risen.
If we were sure that nothing had varied except the two commodities, if we knew that precisely the same quantity of labour was required for their production either of the commodities I have mentioned, tea, sugar, iron, cloth would be an accurate measure of the variations of the other two. I do not think that Mr. Malthus would deny this. Suppose one exchanged for 20 p.c. more cloth than before I should be nearly certain that it would also exchange for 20 p.c. more of iron, or of tea; and if labour had not varied, for 20 p.c. more of labour also, and I should be justified in saying that it had risen 20 p.c. in real value. Suppose the other, on the contrary, would purchase 20 p.c. less of each of these commodities than before. I should be equally justified in saying that it had fallen 20 p.c., in real value. Estimated in each other, one would appear to have risen 40 p.c., and the other to have fallen in a proportionate degree. Now this is the arbitrary definition which I am accused of making—I endeavor to measure the variations in the real value of commodities by comparing their value at different times with another commodity which I have every reason to believe has not varied, and Mr. Malthus does not object to it while I confine it to a large class of commodities. If gold varied compared with all other things, by exchanging for a greater quantity of them, he would call it a rise in the value of gold. If iron, sugar, lead &c. &c. did the same he would still use the same language, but if corn rose, or labour rose, compared with all other commodities, he would say it is not corn or labour which have risen—they are my standard—you must say that corn and labour have remained stationary and all other commodities have fallen. It would be in vain to urge that new difficulties had occurred in the production of corn —that it was brought from a greater distance, or from employing poorer land more labour was bestowed in order to procure a given quantity, he would acknowledge the fact— he would acknowledge this would be a just cause for saying that any other commodity similarly circumstanced had risen in value, but it would not be allowed for corn, because he had notwithstanding its acknowledged variability chosen that for his standard. We may well apply to him his own observation “We have the power indeed arbitrarily to call corn a measure of real value, but in doing so we use words in a different sense from that in which they are customarily used.” “The right of making definitions must evidently be limited by their propriety, and their use in the science to which they are applied.”1
Length can only be measured by length, capacity by capacity, and value by value. Mr. Malthus thinks that “the term real value in exchange seems to be just and appropriate as implying an increase or decrease in the power of commanding real wealth, or the most substantial goods of life.” He does not say the power of commanding real value, but real wealth, he measures value by its power of commanding wealth. But perhaps Mr. Malthus considers wealth as synonymous with value! no, he does no such thing he sees a manifest distinction between them. See page 339 where he says “Wealth, however, it will be allowed, does not always increase in proportion to the increase of value; because an increase of value may sometimes take place under an actual diminution of the necessaries, conveniences and luxuries of life.” A given quantity of wealth cannot be a measure of real value unless it have itself always the same value. There is no wealth which may not vary in value. Machinery may make 2 pair of stockings of the value of one. Improvements in Agriculture may make 2 quarters of corn of the value of one, yet a quarter of corn and a pair of stockings will always constitute the same portion of wealth. Wealth is estimated by its utility to afford enjoyment to man; value is determined by facility or difficulty of production. The distinction is marked, and the greatest confusion arises from speaking of them as the same.1
Mr. Malthus accuses me of confounding the very important distinction between cost and value. If by cost, Mr. Malthus means the wages paid for labour, I do not confound cost and value, because I do not say that a commodity the labour on which cost a £1,000, will therefore sell for £1,000; it may sell for £1,100, £1,200, or £1,500,—but I say it will sell for the same as another commodity the labour on which also cost £1,000; that is to say, that commodities will be valuable in proportion to the quantity of labour expended on them2 . If by cost Mr. Malthus means cost of production, he must include profits, as well as labour; he must mean what Adam Smith calls natural price, which is synonymous with value.3
A commodity is at its natural4 value, when it repays by its price,5 all the expences that have been bestowed, from first to last to produce it and6 bring it to market. If then my expression conveys the same meaning as cost of production, it is nearly what I wish it to do.
The real7 value of a commodity I think means the same thing as its cost of production, and the relative8 cost of production of two commodities is nearly in proportion to the quantity of labour from first to last respectively bestowed upon them. There is nothing arbitrary in this language; I may be wrong in seeing a connection where there is none, and that is a good argument against the adoption of my measure of value, but then the objection rests on an error in principle, and not on an error in nomenclature.
There can be no question &c., &c.I agree with Mr. Malthus, but we have the power to do this by ascertaining the value of money, in the command of labour, for any time that we may wish to make the comparison.
It is not necessary for this purpose to constitute necessaries, conveniences or labour the measure of real value.
Demand may be defined to be the will combined with the power to purchase.This definition of demand must be remembered, because in the subsequent part of his work Mr. M. appears to forget it. In the last chapter, where he speaks of the pernicious consequences arising from a want of demand, he appears to me to forget that the power as well as the will to purchase is required. He says, that men will not demand because they prefer indolence to work; but they cannot produce if they will not work; and if they do not produce, they may have the will, but they want the other essential quality of demand; they want the power.
The greater is the degree &c.I agree with Mr. Malthus (see 54)1 ; however great the demand for a commodity may be, its price will be finally regulated by the competition of the sellers,—it will settle at or about its natural price; that price, which, as Adam Smith observes,2 is necessary to give the current rate of wages to the workmen, and the current rate of profits to the capitalist. On a comparison of the uses of iron, and gold, the demanders might be both able and willing to give more for iron, than for gold; but they cannot; the competition of the sellers prevents it and sinks the value of both metals to their cost of production, to their natural price.—The market price of a commodity may from an unusual demand, or from a deficiency of supply, rise above its natural price, but this does not overturn the doctrine that the great regulator of price is cost of production.
If instead &c.Mr. Malthus here substantially admits, that it is not the relation of demand to supply, which finally and permanently regulates the price of commodities, but the cost of their production. On the other hand I do not deny, that in the progress of the rise or fall of commodities, there may be, what is usually termed, an increased demand, or an increased supply.
If for instanceI see no inconsistency, in such case, in saying that corn, labour, and money have all altered in exchangeable1 value. I compare them with the value of sugar, iron, shoes, cloth, copper &c. &c., and I find that they will exchange for more of all these things than before; where then can be the impropriety of saying that these three commodities have risen in value, altho they exchange for precisely the same quantity of each other as before? I am under an absolute necessity of saying this, or of saying that sugar, iron, shoes, cloth, copper and a thousand other commodities have fallen in value, and if I adopt this latter term does not Mr. Malthus’s objection offer itself in full force, that while all these commodities will exchange for each other in the same proportions as before, we affirm that their value has fallen? Suppose the mines were not to afford the same quantity of silver that they usually have done with the same quantity of labour, and that in consequence silver doubled in value. If tea sold for 8/- pr. lb. before, it would then sell for 4/-. If corn had sold for 80/- pr. quarter, it would then sell for 40/-. But suppose tea to become scarce, and to rise in this valuable medium to 8/-, and corn to be obtained with more labour, and to rise to 80/-, would it not still be true that corn, tea, and money had all doubled in value?
In the very earliest &c.In all the observations of Mr. Malthus on this subject I most fully concur. I have myself stated that in proportion as fixed capital was used; as that fixed capital was of a durable character; and in proportion to the time which must elapse before commodities can be brought to market, the general principle of the value of commodities being regulated by the quantity of labour necessary to their production, was modified; but I was of opinion, and still am of opinion, that in the relative variation of commodities, any other cause, but that of the quantity of labour required for production, was comparatively1 of very slight effect. Mr. Malthus remark that this cause operates in every stage of society is most just.
The proposition of Mr. Ricardo &c.I am glad to have Mr. Malthus assent to the truth of my proposition. He says “no one could have thought the proposition paradoxical, or even in the slightest degree improbable, if he had stated that a fall of profits would occasion a fall of price in those commodities, where from the quantity of fixed capital employed, the profits of that capital had before formed the principal ingredient in the cost of production.” Now I confess that I feared Mr. Malthus himself would have found the proposition paradoxical, because in some of his works he has maintained that a rise in the price of corn will be followed by an equal rise in the price of labour, and by an equal rise in the price of all commodities; and it was only after further consideration that he thought it fit to reduce the proportion in which commodities would vary when corn varied, and to fix it at 25 or 20 p.c., when corn varied 33⅓—that is to say when corn varies 100 p.c. commodities are to vary 75 to 60 p.c.1 —Mr. Malthus made no exceptions.2 Mr. Malthus may say that a rise in the price of corn and labour is a very different thing from a fall of profits—so it is, if the rise is owing only to a fall in the value of the medium in which price is estimated; in which case there is no real rise in the value of corn and labour, and therefore no fall of profits. Mr. Malthus I believe would find it difficult to shew that there can be any fall in the rate of profits unless there be a real rise in the value of labour. That only is a real rise in the value of labour when a larger proportion of the whole produce, or the value of a larger proportion,3 is devoted to the payment of wages—not the proportion of the produce of one manufacture only but of all.
If the clothier is obliged from a general rise of wages to devote a larger portion of his cloth to the payment of wages, we may be quite sure that the hatter will devote a larger proportion of his hats, the shoemaker a larger proportion of his shoes and the iron founder a larger proportion of his iron to the same purpose. Every1 other capitalist will be obliged to do the same, and even the farmer, though the price of his commodity rises, will after paying rent2 have less of it, and of that less quantity he must pay away a larger proportion than before3 to his labourers.4 Mr. Malthus I now understand would agree to the following proposition. In all cases where the rise in the price of corn, is followed by a rise in the money price of wages5 , and a fall of profits, so far from its being true that all other commodities would also rise in price, there will be a large class which will absolutely fall6 —some which will not vary at all, and another large class which will rise7 . This I believe to be a correct opinion. The last class will rise only in a trifling degree, because though they will rise on account of the rise of the price of labour, they will fall on account of the fall of profits. The8 fall from the latter cause, will, in a great measure, balance the rise from the former.
See Mr. Malthus opinion Page 95 “What then becomes of the doctrine that the exchangeable value of commodities is proportional to the labour which has been employed on them? &c. &c.”
Consequently upon a rise in the price of labourI inadvertently omitted to consider the converse of my first proposition. Mr. Malthus is quite right in asserting that many commodities in which labour chiefly enters, and which can be quickly brought to market will rise, with a rise in the value of labour.1 See last remark.
It is quite certain that merely because wages rise &c.It is curious to observe how Mr. Malthus here adopts the language he condemns, he talks of a rise of wages, of a rise of the price of commodities &c. &c., always supposing that money is stationary in value, and therefore a measure of the real value of other things; for if money was not stationary in value;—if wages rose in money value, merely because money fell; it would not be true that profits would fall;—it would not be true that some commodities would rise some would fall, and a few remain stationary—for they would all rise. That definition which he calls arbitrary he nevertheless adopts.2 If he says that the medium I have chosen is variable, then none of his conclusions are just:—if he3 admits its invariability, then there is an end of his objection against the medium under the conditions I have supposed4 as a measure of real value.
What then becomes of the doctrine &c.Mr. Malthus shews that in fact the exchangeable value of commodities is not exactly proportioned to the labour which has been employed on them, which I not only admit now, but have never denied.
He proves then that quantity of labour is not a perfect measure of value; but what are its deviations from a perfect measure on account of the circumstances which he mentions? —if they are slight, as I contend they are, then we are still in possession of a measure tolerably accurate, and in my opinion more nearly approximating to truth, than any that has been yet proposed. Mr. Malthus’s proposed measure has none of the qualities of a measure of value, the imperfections on the score of variability which he himself attributes to it, are greater than any which he imputes to the one which I propose. Money price Mr. M. justly1 calls nominal price. The principles of political Economy cannot be explained by the changes which take place in nominal2 price. Every one who attempts to explain those principles should adopt the best measure of real value that he can obtain, for that purpose.
Mr. M. has adopted one which he thinks the best, and to the use of that he should have confined himself.
But as it is known &c. &c.See Remark [(16), on p. 72.]1
And the necessity of paying these rents must affect the prices of almost all the goods fabricated in towns.If the goods were not superior in quality, one does not see what inducement a buyer should have to purchase them in the dearer market.
All cattle pay rent &c.The value of cattle is regulated by the value of corn, if therefore it be shewn that the corn which regulates the general1 value of that commodity, only affords wages and profits, cattle, obtained under the same circumstances, will yield no rent. I do not mean to say that corn raised or cattle fed on fertile land, pay no rent, only that some corn and some cattle yield no rent, and that this corn and cattle regulate the value of all other corn and cattle. If I manure a field, at some expence, and make it yield more grass, and fat an additional ox upon it, what portion of the price of that ox affords a rent? the value of the ox only replaces capital and its profits. Mr. Malthus says “if rent were greatly diminished, there cannot be a doubt that the same quantity of cattle might be produced in the market at much lower prices, without any diminution of the profits or wages of any of the persons concerned”—true it might be produced, but the question is, would it? If as Mr. Malthus allows rent is the effect and not the cause of high price—if it be true that “there is no just reason to believe that if the landlords were to give the whole of their rents to their tenants, corn would be more plentiful and cheaper;”* —if “the effect of transferring all rents to tenants would be merely the turning them into gentlemen”* then neither corn nor cattle could be produced at lower prices on the lands actually in cultivation, because “the last additions made to our home produce are sold at the cost of production.”*
Among the events &c.I can understand, that in consequence of improvements in agriculture, land of a worse quality may be cultivated, with a lower2 price of produce, than would have been cultivated if no such improvement had taken place; because a large quantity, at a low price, may be of greater value, than a smaller quantity, at a higher price; but with a lower price of corn—wages will be low1 , and profits will be high, and it is only because profits are higher that the worse land can be cultivated. Suppose a nation had cultivated its lands as highly as was practicable, and profits were so low that no inducement existed2 to push its cultivation any further—that the labour of ten men on the lands not yet cultivated could not return a3 produce of a value sufficient to clothe as well as feed the cultivators—such land would not be cultivated— suppose now improvements in agriculture to take place, and consequently the ten men on this bad land could raise 30 p.c. more produce than4 they could raise before; this land would then be cultivated, if the population increased;—but under these circumstances corn would be at a lower price,—labour at a lower price, and profits higher than before; and on no other conditions could this poorer land afford any profits to the cultivator. How great an error then must it be for Mr. Malthus to say, that with the same price of produce, the same price of labour, and the same rate of profits, naturally poorer land would be taken into cultivation.
In the whole of this discussion Mr. Malthus forgets that the fact of rent not being a component part of price5 , does not depend on his proving that all lands actually taken into cultivation do pay rent.6 If he could make out to every body’s satisfaction, that there was no land in cultivation, for which a rent was not paid, he would be as far as before from settling the question that rent formed a component part of price. If I can employ more capital on my land, without paying any additional rent for so doing, I can raise some7 corn, some cattle, some hops and some of every other agricultural produce, into the value of which no rent will enter as a component part. It is the quantity so raised, and the price at which I can afford to sell it, which regulates the value of all other corn, cattle and hops, and till this is denied, and can be refuted, the proposition is in my opinion established, that rent is not a necessary constituent of price.—I hope what I have said may be considered as a sufficient refutation of Mr. Malthus’s assertion that “there is no portion of wool, leather, flax, and timber produced in this country which comes from land that can be so described” that is to say for which rent is not paid. In his Inquiry into the nature of rent he has justly observed “It will always answer to any farmer who can command capital, to lay it out on his land, if the additional produce resulting from it will fully repay the profits of his stock, although it yields nothing to his landlord ” [p.] 36. This is unanswerable. Into the price of such additional produce no rent enters.
If we were determined &c.If equal capitals yielded commodities of nearly equal value, there might be some grounds for this argument; but as from a capital employed in valuable machinery, and1 steam engines,2 a commodity of a very different value is obtained than from a capital, of the same value, employed chiefly in the support of labour, it is at once obvious that the one term, thought to be the more correct by Mr. Malthus, would be the most incorrect that could be imagined.
But if rentA farmer who pays a high rent, requires no greater capital than one who pays a low rent. He pays a high rent not because he employs a more valuable capital, but because the same capital yields him a more valuable return. He pays it too, after he has sold the produce.
We have here a clear case of increased cost &c.I confess I do not understand this passage. Is cost estimated by quantity of labour? I understand Mr. Malthus to say it is; then the cost of corn is doubled, because it requires twice the quantity of labour and he says its value is not doubled because it will exchange for no greater quantity of labour. But how will it exchange for linen, hats, shoes, iron and every other commodity? it will command double the quantity1 of them; then, according to my view, it has doubled in value. But it will not exchange for double the quantity of labour? certainly not, and why? because the value of labour rises with the value of corn, not indeed in the same proportion, because corn is not the only thing consumed by the labourer; but the value of labour rises, and will therefore also command more linen, shoes, hats, iron and every other commodity.
The proof that Mr. Malthus offers, that corn has not doubled in value, is, that it will not command so much of a thing, which has at the same time risen in value.
But what is meant by a quantity of labour, being the cost of a commodity?—by cost, is always meant the expence of production2 estimated in some commodity, which has value, and it always includes profits of stock. The cost of production of two commodities, as I before observed,3 may be in proportion to the quantity of labour employed on them, but it is essentially different from the labour itself. “This instance,” Mr. Malthus adds, “shews at once that the quantity of labour which a commodity has cost in its production is not a measure of its value in exchange”—certainly not, in Mr. Malthus measure of value in exchange4 .
Let us suppose &c.The objections made here to gold as a measure of value on the supposition that it always required the same quantity of labour to produce it are in substance the very same that were made in the last section to labour itself as a regulator of value. It was there shewn that commodities did not vary exactly in proportion to the quantity of labour which they required for their production:—it is now shown that they do not vary relatively to one particular commodity1exactly in proportion to the quantity of labour required2 for the production of them, and the particular commodity.
The market prices of goldIt was never contended that gold under the present circumstances was a good measure of value, it was only hypothetically, and for the purpose of illustrating a principle, supposed that all the known causes of the variability of gold, were removed. In the case supposed by Mr. Malthus, gold would not be brought to market in the same quantity as before, unless its market price was equal to, or exceeded, its natural price; the reduction of the quantity would slowly elevate its price.
I said3 “suppose all variations in the value of gold to cease, it would then be a good measure of value. I know they cannot cease—I know it is a metal liable to the same variations as other things and therefore not a good measure of value, but I beg you to suppose all causes of variation removed, that we may speak about the variations of other things in an unvarying measure without confusion.” Am I answered by being told that gold is variable, and that I have omitted to mention some of the causes of its variation?4
According to all accounts &c. &c.I most distinctly admit that gold and silver may be of very different values in different countries1 , particularly if their value be measured by the quantity of2 corn and labour which they will command. I have indeed endeavored to shew3 that this difference4 is owing to three causes; first, the expence attending the purchase of gold and silver, with bulky commodities, on account of the expence attending their conveyance to the markets where gold and silver are sold. Secondly, on account of the distance of the voyage which will still further enhance these expence. Thirdly the different rates of profit in different countries, owing to the unequal accumulations of capitals in proportion to the fertility of the land. If labour were much higher in Yorkshire, than in Gloucestershire, profits would be lower, and capital would by degrees be removed from the former to the latter place; so that each district would have that portion of the general capital which it could most beneficially employ;—not so between independent countries. Capital does not move from England to Poland, merely because labour is cheaper there; and for this reason, gold will be low in value compared with labour in one place, high in another.
I do not however agree with Mr. Malthus’ calculation. In comparing a day’s labour of one country, with a day’s labour of another, we must take into our consideration5 the different quantities of labour, which may be comprised under the general term of a day’s labour. Mr. Malthus has dwelt much on the disinclination to work, and on the indolence of labourers, in countries where food is obtained with the utmost facility, he surely then will not compare a day’s work of a South American or of a Hindoo, with the day’s work of an Englishman, or a Frenchman. Does Mr. Malthus really believe that there is five or six times more labour employed on Indian Muslins than on English?—Besides omitting the consideration which I have just mentioned,6 he surely does not reckon the labour bestowed on machines, such as steam Engines etc., on coals &c. &c.: Does not the labour on these constitute7 a part of the labour bestowed on the muslins?
In the first place &c.The reader will observe that the quality which appears to be most sought after by Mr. Malthus in a measure of real value is not invariability, but one “which is most extensively the subject of exchange.” “Secondly, the value of commodities, in exchange for labour, can alone express the degree of abundance in which they are supplied, compared with the desires and number of those who are to consume them. Thirdly, the accumulation of capital depends upon its power of setting labour to work.” Now these are important enquiries with reference to other questions but I ask, what can they have to do with a measure of real value? “I object to your measure of value says Mr. Malthus because it is not so invariable as you represent it,—there are causes of variation which affect it for which you have not made due allowance.” Who would not suppose then that when he proposed a measure of value he would propose one free from these objections? He does quite the contrary, he proposes a measure which is not only variable in itself, but is particularly variable, on account of its connection with other variable commodities, and in his reasons for chusing it gives several which have no reference to the subject, for nothing is to be considered in a measure of value but its invariability or its near approach to that character.
No plenty of commodities &c.This is true in whatever medium you chuse to measure exchangeable value.
Estimated in iron, sugar, coffee, a commodity has cost me a certain quantity of one of these articles—I will not produce it, unless it will exchange for more of that particular article. Estimated in labour, it has cost me a certain value, I will not produce it if it will not exchange for more. Estimated in quantity of labour, I will not produce it, if it will not command a greater quantity than has been employed in its production.1 Mr. Malthus makes nearly the same observation in the next two pages.
But still labour &c.The reader is particularly requested to remark the character for invariability, which Mr. Malthus gives to the measure of real value, proposed by himself.
A certain quantity of corn &c. &c.This is also a measure proposed by Mr. Malthus, and the same account of its invariability is given, as he before gave of the invariability of labour.
42 1p. 128.
Though neither of these two objectsA complete fallacy seems to me to be involved in the whole of this argument. Corn is a variable commodity says Mr. Malthus, and so is labour variable, but they always vary in different directions; if therefore I take a mean between the two, I shall probably obtain a measure approaching to the character of invariability.
Now do corn and labour vary in different directions? When corn rises in relative value to labour, labour falls in relative value to corn, and this is called varying in different directions. When cloth rises in price, it rises as compared with gold, and gold falls as compared with cloth, but this does not prove that they vary in different directions, for at the same time gold may have risen as compared with iron, hats, leather, and every commodity except cloth. What then would be the fact? that they had varied in the same direction —gold may have risen 10 p.c. in value compared with all things but cloth; and cloth may have risen compared with all things 25 p.c., excepting with gold, relatively to which it would have risen only 15 p.c. We should think it strange in these circumstances to say that in chusing a measure of value we would take a mean between cloth and gold, because they varied different ways, when it is absolutely demonstrable that they have varied the same way. Now this is what Mr. Malthus has done in respect to corn and labour. A country finds increasing difficulties in supplying the corn necessary for a continually augmenting population, and in consequence corn rises as compared with all other commodities. As corn rises, which forms so material an article of consumption to the labourer, though not the only one, labour also rises, but not so much as corn:—if corn rises 20 p.c., labour may possibly1 rise 10 p.c. In these circumstances, estimated in corn, labour appears to have fallen—estimated in labour corn appears to have risen—but it is evident that they have both risen, though in different degrees, for they will both be more valuable estimated in all other commodities. A mean then is taken between two commodities which are confessedly variable, and it is taken on the principle that the variation of one corrects the effects of the variation of the other;—as however I have proved that they vary in the same direction, I hope Mr. Malthus will see the expediency of relinquishing so imperfect, and so variable a standard.
From Mr. Malthus argument in this place one would suppose that labour fell when corn rose, and consequently that with a given quantity of iron, leather, cloth &c. more labour could be obtained2 , the contrary is the fact, labour, as well as corn, rises as compared with these commodities. Mr. Malthus says so himself in page 125 “In the progress of improvement and civilization it generally happens, that when labour commands the smallest quantity of food, it commands the greatest quantity of other commodities”—what is this but saying that when a great quantity of other commodities is given for food, a greater3 quantity of other things is also given for labour, or in other words that when food rises, labour rises?
In an estimate of value, the cheapness arising from skill and machinery may without much error be neglected.What is this but saying that in an estimate of value it is of no importance what quantity of labour may be applied to the production of commodities? This I think must be an oversight for Mr. Malthus uniformly allows that the quantity of labour employed on commodities is the main cause of their value. How can it indeed be denied?
The sacrifice of toil and labour made in the production of a commodity; that is its cost, or more properly speaking a portion of its cost.Mr. M. as I have said before1 misunderstands me—I do not say a portion of its cost measures its exchangeable value—but I say its whole value will be in proportion to a portion of its cost, and I do not say this without allowing for modifications and exceptions—though I consider them of no great magnitude. Without misunderstanding me Mr. Malthus could never apply the following observation to my doctrine “Wherever there are profits, (and the cases are very rare indeed in which there are none) the value of a commodity in exchange for labour is uniformly greater than the labour which has been employed upon it.” If I had said that the value of commodities was the same thing as the value of the labour expended on them, the remark would have been well founded, but I have said that the relative value of commodities is1 in proportion to the quantity of labour bestowed on them. That value may be double what the labour cost. The comparison between Mr. Malthus’s proposed measure and the one which I have proposed is thus summed up “We have therefore to choose between an imperfect measure of exchangeable value, and one that is necessarily and fundamentally erroneous.”
Mr. Say in his valuable Treatise &c.Can any one doubt that if a person could appropriate to himself the wind and the sun, he would be able to command a rent for the uses to be derived from them?
The prevailing opinionsAs I have dedicated a chapter in my Political Economy to the consideration of this subject,1 I shall not go over the whole again but shall content myself at the present moment with saying that it appears to me that M. Sismondi, and Mr. Buchanan are substantially right in the opinions which Mr. Malthus has quoted from their works.
That quality of the earth &c.That is to say it yields a greater value in return than the value of the labour expended on it. In this it agrees with every occupation in which man engages. If produce of all kinds did not fulfil those conditions it would not be produced.
That quality peculiarThis appears to me quite fallacious. I have given my reasons for thinking so in my work on Polit. Econ.1 See also remark on Page 1422 .
p. 140.“If there had been no surplus produce there could not have been any rent.” In this all men are agreed.
If an active and industriousThe value of their landed property would not be increased till there was a demand for the additional produce. If they were tenants and had a money rent to pay they would ruin themselves by increasing the supply of produce before a demand existed for it. The money value of the whole produce would be less than when the quantity was less, and they would have the same money rent to pay. This was the peculiar evil under which the farmers suffered at the termination of the war, when the ports were opened. No producer can have any interest in supplying his commodity in a greater abundance than it is demanded at its natural price. As soon as it sinks in the market below its natural price, that is to say as soon as the wants of the existing population are satisfied, there can be no motive for producing it, but every motive to cease to produce it.
If Mr. Malthus had merely said that with the facility of providing food, population will rapidly increase, because food is one of the most important objects of consumption, it would be impossible to differ with him; but he invariably insists that the increase of population, does not depend on the means which we possess of providing for it, or rather which the people themselves have of providing for their offspring, but on the previous provision of food, which is laid up for them.
But if the fertility &c.I acknowledge that a great part of the population and wealth of the world would be destroyed, but the question is concerning the rents of the landlords and not concerning the wealth of the world1 —one third of 100 millions is more than one fourth of 120 millions. To suppose the fertility of the land diminished one half, is a most extravagant supposition —I made it only to illustrate a principle. Mr. Malthus has misunderstood me—I fully acknowledge the interest which landlords have in the increased fertility of their land, and in improvements in agriculture, for they cannot fail ultimately to reap the benefit,2 all I contend for, is, that the immediate effects are injurious to them, and if the principle of population were not strong might be permanently3 injurious to them.
But this is begging the whole of the questionWhat does Mr. Malthus say in this passage but that the rent of corn land is limited by its limited4 power of feeding people—that these vineyards are not limited within so narrow a range. I admit his argument, but it does not change the principle.
In this case it is physically impossibleThe question is not about the number of the demanders, but of the sacrifices which they will be willing to make to obtain the commodity demanded. On that must its value depend.
In all common monopoliesHere is an unfounded distinction. In the partial monopoly of the land, which produces necessaries, (says Mr. M.) such an excess of the value of the produce above the value of the labour, employed in obtaining it, can only be created by the qualities of the soil,—in the other case they are [“]created by external demand.” The qualities of the soil can do nothing in either case without external demand. The rent of our most fertile lands is greater now than it was 100 years ago: Why? Because of the increase of external demand, compared with the facility1 of supplying it. The qualities of the soil were the same then as now, yet rent did not increase, till external demand increased.
In the production of necessaries &c.Why is this? because population is found to increase invariably with the means of providing for it, and therefore its value in corn does not rise—but population and necessaries are not necessarily linked together so intimately—it is not difficult to conceive that with better education and improved habits, a day’s labour may become2 much more valuable estimated even in what are now called3 the necessaries of the labourer.
In all common monopoliesIn the whole of this paragraph I most fully concur.
It is extraordinary that Mr. RicardoThe two opinions appear to me to be quite consistent with each other. It is the expence of producing the last portions of corn which regulate its value, and the value of all other corn that comes to market. Corn raised under more favorable circumstances, and on more fertile land, will afford a rent in proportion to the difference of expence in raising it. This rent then is the condition on which you obtain the whole quantity of corn required—for you could not obtain the additional quantity but on worse land;—to encourage its production its price must rise, and the consequence of a rise of price is rent on1 the more fertile land. Now this rent is not a clear gain—if landlords receive more the buyers of bread pay more, and therefore I may without meaning the slightest reflection on landlords, which in this case could only proceed from the grossest ignorance, say that this is a transfer of wealth, advantageous to the landlords and proportionably injurious to the consumers.
Perhaps in no part of his book has Mr. Malthus so much mistaken me as on this subject—he represents me as supporting the doctrine that the interests of landlords are constantly opposed to those of every other class of the community, and one would suppose from his language that I considered them as enemies to the state. From what I have just said it will be seen, that I think rent, and the increase of rent, the necessary and unavoidable condition of an increased supply of corn for an increasing population. The whole tenor of my work on Polit. Econ. shews the same thing, and it was hardly fair to select a particular passage, which appeared to have a different meaning, and which was applicable only to particular circumstances. In my work,2 I have spoken with great approbation of that passage in Mr. Malthus’s former work1 , where he says, that the effect of landlords giving up their whole rent would not make corn cheaper— this I think was not placing the landlord in an invidious light in regard to the consumer. All I meant to say of the landlords interest, was, that it would be for his advantage that the machine which he had for producing corn should be in demand—that in fact his rent depended on it;—that on the contrary it was the interest of the consumer to use the foreign machine, if that would do the work cheaper. It is only in this case, that the interests of the landlord and consumer really, if well understood,2 come in contact,—in this case I am sure they do come in contact, and there is nothing which I have said that I wish to recall on that subject.
I have indeed observed that improvements in agriculture were in their immediate effects injurious to the landlord, and beneficial to consumers, but that ultimately when population increased, the advantage of the improvement was transferred to the landlord.3 To this opinion I also adhere, but in saying so I cast no reproach on landlords—they have not the power to arrest improvements, nor would it be their interest to do so if they could. Great improvements in any branch of production are in their first effects injurious to the class who are engaged in that branch, but this is the statement of a fact or of an opinion4 , and cannot be supposed to cast any injurious reflections. Mr. Malthus is not justified by any thing I have said in pointing me out as the enemy of landlords, or as holding any less favorable opinion5 of them, than of any other class of the community.
Indeed, I do not see that Mr. Malthus’s language is very different from my own; in page 152 he says “The fall of profits and wages which practically takes place, undoubtedly transfers a portion of the produce to the landlord” “The transfer from profits and wages, and such a price of produce as yields rent which have been objected to as injurious, and as depriving the consumer of what it gives to the landlord, are absolutely necessary in order to obtain any considerable addition to the wealth and revenue of the first settlers in a new country” Here the transfer is admitted, but it is said to be necessary—I say exactly the same thing, and in page 138 Mr. Malthus quotes a passage from Mr. Buchanan for the purpose of condemning it, which appears to me to express only the same opinion. “The high price in which the rent or neat surplus originates, while it enriches the landlord who has the produce of agriculture to sell, diminishes, in the same proportion the wealth of those who are its purchasers; and on this account it is quite inaccurate to consider the landlord’s rent as a clear addition to the national wealth.[”]
Mr. Ricardo has quite misunderstood me &c. &c.I certainly did misunderstand Mr. Malthus. He says he stated “three causes as necessary to the production of rent and he could not possibly have meant to say that rent should vary always and exactly in proportion to one of them.” I should think that my inference that he did was the natural one if the other causes were at the time inoperative. One of the causes stated by Mr. Malthus as necessary to the production of rent is the comparative scarcity of the most fertile land. If he had said increase this comparative scarcity and rent will rise—I should have agreed with him, and here would have been one cause influencing rent without any interference from the other two2 . So when talking of what he calls another cause of rent, the fertility of the land, and the excess of its produce beyond what is necessary to support the labourers, employed on it, he said, “Diminish this plenty, diminish the fertility of the soil and the excess will disappear[”],—he did appear to me to identify the excess or surplus produce with rent, and he appeared to me to lead his readers to infer that rent rose and fell with the quantity of this surplus produce. And after reading Mr. Malthus’s work which is now before me he appears to me by his language frequently to convey an impression to the mind of his reader that rent rises and falls with the rise and fall of the quantity of surplus produce beyond what is bestowed on the actual labourers. In page 228 Mr. Malthus says, “But if it be granted as it must be that a limitation in the power of producing food is obviously necessary to man confined to a limited space, then the value of the actual quantity of land which he has received depends upon the small quantity of labour necessary to work it compared with the number of persons which it will support or in other words, upon that specific surplus so much underrated by Mr. Ricardo, which by the laws of nature terminates in rent.”
Nor is it possible &c.A part of what in future will be rent forms now the profits of stock. It is incorrect I think to talk of rent forming at any1 time the profits of stock, rent is formed from profits of stock, it was not rent when it was profits.
When a given portion &c., &c.True the loss of quantity is generally divided between the labourers and capitalists, but we are not talking of quantity, we are talking of value. Will the labourer have less value? if quantity and value be the same thing, and in raw produce they are, according to Mr. Malthus, he will;—but if with the reduction of quantity the value rises, it is certain that the labourer will have a smaller quantity, and a greater value— the farmer will have both a smaller quantity, and a smaller value.
The expences of cultivation having fallen &c. &c.In what medium fallen? Not in money—not in Mr. Malthus’ measure of value, wages. Except in corn the commodity which requires more labour and rises in value, the expences of cultivation would have risen in value.1
And at every step it is clear that if the price of produce do not fall the rent of land must rise.It is curious to observe how Mr. Malthus explains the laws of rent, of profits, etc. without having recourse to his own measure of real value;—he contents himself with a medium which he condemns, and deems variable. If he says that during the changes he explains, the medium is varying, then the alteration in price may be owing to the variation in the medium, and his account of a rise of rent, and a fall of wages, is quite unsatisfactory. If he says that to illustrate his argument, he supposes the medium invariable, then he has done what he condemns in me, for I have only supposed that all the causes of variation in gold were removed, and that it was itself invariable.
But Mr. Malthus has another better measure of real value, why then does he not uniformly use it? there is no information given by telling us of alteration in nominal value. If Mr. Malthus supposes gold in the case he now mentions invariable, it ought to agree with his better standard. If Mr. Malthus chuses the medium which I use, he ought to argue fairly with2 it, he ought to say, not that the price of produce would not fall, but that it would absolutely rise, for it is the demand for corn which is the original cause of the cultivation of new land. It is the high price of corn, which finally lowers profits, because the smaller quantity obtained on new land at a high price, will not compensate for the higher wages, which are consequent on the higher price of corn. To be consistent then if Mr. Malthus talks of money prices he must say that corn, rent, and wages would rise, but profits would fall. But with these higher wages the labourer will get less necessaries and1 enjoyments than before; and therefore in Mr. Malthus’s medium2 they should be called lower wages. I acknowledge that the labourer will get less of these enjoyments, but that does not prove his wages of less value. If I gave a man a shilling a week for the purpose only of buying sugar, and from the effects of a hurricane, sugar should rise to double its former value, no one would, I think, deny that I should give a greater value to the man if I gave him eighteen pence a week, altho’ it would purchase him less sugar than one shilling purchased him before. But my complaint against Mr. Malthus now is that he neither uses my language consistently, nor his own. In his own he would have been obliged to say “Population increasing, and there being a demand for a great quantity of corn, all other commodities would have fallen in value, that is to say they would have fallen in the standard which I have chosen, corn, which is of course invariable. The consequence of this fall of value of all commodities would be also a fall of wages, but not in the same proportion as the fall of commodities, consequently if the standard be corn goods will have probably fallen 20 p.c., if it be labour they will have fallen 10 p.c. But as my standard is itself a commodity, and may be increased in quantity, there is much greater temptation to increase it, than to increase any other commodity, for as compared with labour this commodity has increased in value,3 all others compared with labour have fallen in value, and consequently greater profits will be obtained by the production of corn: —this however is a wrong conclusion,—it would be true if land of equal fertility could be taken into cultivation, but recourse must be had to poorer land. The smaller quantity obtained on this land, will bear the same relation to the quantity of labour employed4 as the quantity of corn obtained in exchange for any manufactured goods, will bear to the labour that obtained them; consequently the final result of the increase of population, and the greater demand for corn, will be, a fall in the value of all commodities, lower profits, lower corn wages, and a transfer of a part of the produce, of the better lands, from profits to rent. Landlords will benefit in two ways, first in getting more corn for rent, secondly in getting all goods for a less quantity of corn.” This is the way I should explain the laws of rent, and profit, if I adopted Mr. Malthus’s language, it differs not in principle from my own, every thing is the same except the medium in which value is estimated.
It may be laid down &c., &c.Who denies this? I have expressly affirmed it.5
And under whatever name this may be taken it is essentially rent.Profits come out of the surplus produce; if profits were taxed, the tax would come out of the surplus produce, but it would not therefore come out of rent. Here Mr. Malthus identifies surplus produce with rent. See remark [(59) on p.] 152.
Such ample profits and wages as could not be obtained &c.Why should profits and wages, in agriculture, at any period of society, be greater than in any other employment?
It is obvious &c.An excessive rent could only be obtained by these means, at such a time.1 The rent would be created by raising prematurely the value of corn as compared with all other things. Would Mr. Malthus deny that this rent, though2 profitable to the government, would be proportionably injurious to consumers?
But whatever may be the nature &c.Who is disposed to underrate the importance of fertility in the land? The surplus produce is necessarily limited by the fertility of the land.
It may be thoughtCapital and labour would get no greater advantage in other employments, not for the reasons stated by Mr Malthus, but because as soon as the tax affected profits, by first absorbing the rent, it would raise the price of raw produce. The rise in the price of raw produce would raise wages and affect the profits equally in all employments, so that there would be no temptation to remove capital from the land.
This would depend &c.What have profits to do with the supply of1 capital employed in manufactures and commerce?
Profits in agriculture would be high, if the return to the farmer, after paying his rent, was great, in quantity, compared to the quantity which he must expend for the support of his labourers and other necessary outgoings. Profits mainly depend on the fertility of that land, for which little or no rent is paid.
Such an accumulation of capital as will lower the profits of stock.It is here inferred that a fall of profits is a necessary consequence of an accumulation of capital. No mistake can be greater.
Such an increase of populationIt is here also inferred that a fall of wages would necessarily follow an increase of population; it is evident that this must depend on the demand for people. It is also asserted that a rise of rent will necessarily follow a fall of2 wages. By wages, here, Mr. Malthus means corn, not money wages. Now suppose the corn wages of labourers to fall throughout the country, what temptation would that offer to cultivate fresh land? In the first instance none—the sole effect would be to raise profits.
The rise of profits might lead to fresh accumulations—to an increased demand for labour—to an increase of people— to a higher price of produce, and to an increase of cultivation. Low wages then only operate as they may lead to the accumulation of capital, the first cause of the rise of rent mentioned by Mr. Malthus, and would only produce that effect, if the land to be taken into cultivation were less fertile than that already cultivated.
3dly Such agricultural improvementsThis is precisely the same as the last cause, and would lead probably to the accumulation of capital by increasing the rate of profits. Mr. Malthus’ great mistake seems to be this. He first lays down, what is certainly true, that rent is derived from the surplus produce of the land; he then argues that every thing which will augment this surplus produce will raise rent.* But he forgets that profits are also paid out of the surplus produce, and therefore although I agree with him, that a fall of wages,1 will increase the surplus produce, I do not agree with him that this increase will go to rent—it will infallibly go to profit. I do not say that it will always remain a part of profit, for with the increase of population, and the employment of additional capital on the land, it is highly probable that a part if not the whole and more than the whole2 of these profits may be transferred to rent.
Mr. Malthus knows, and admits, that rent is the difference between the produce of two equal capitals employed on3 the cultivation of the land. I ask him then confidently if that difference is increased by a fall of wages?4 Mr. Malthus may say that improvements on the land, if they increase the produce on all land in equal proportions, will increase the difference, in corn produce6 between equal capitals employed on the land. True, but will this difference be of greater value, and if it be not will it lead to increased cultivation?7 will it command more shoes, clothes, furniture, &c. &c.? No,—it may possibly command more labour, that is to say, as labour falls, an equal value of rent will command more. But so will every other equal income in the country and therefore the cultivation of land will not be preferred to any other employment of capital8 . The capitalist will not only obtain an income of greater value, and therefore obtain more of all commodities that he is desirous of consuming, but with an equal quantity of money, he can command an increased quantity of labour. In this last particular he will be on a par with the landlord. The stockholder will participate in this common advantage, he will receive the same money dividend, but nothing will be lowered in price except labour.
This is on the supposition that the landlord receives an increased corn rent, but he will receive for a considerable time a less corn rent. The improvements in agriculture will increase faster than the population9 can be increased, consequently capital will be withdrawn from the land, for though there would not be an increased demand for corn, there would be an increased demand for other things.
To withdraw capital from the land must be accompanied with a fall of rent. If the corn rent did not fall, the money rent would, and if the prices of all the commodities on which rent was expended, did not fall, which they would not, Mr. Malthus would probably allow that this was a real fall of rent.
I think I see a tenant going to his landlord with £90 instead of a hundred, the prices of all commodities, except corn, being nearly the same as before, and telling him that he had brought him an increase of rent. He would say I have had it proved to me that corn and labour are the only measures of real value—with 90£ you can obtain more corn, and more labour, than you could before with £1001 , you have therefore an increase of rent, the apparent2 fall is merely nominal. The landlord in all probability would say that it was sufficiently real, since notwithstanding the increase of his rent in this real standard, he was less able to command most of the necessaries and all the luxuries3 of life.
I know this argument may be retaliated on myself, it may be said you on many occasions say that wages are increased because they rise in your standard of value, the unfortunate labourer however finds when he goes to market with his increased wages he can obtain a less quantity of one of the chief necessaries4 of life—he then would as you before represented respecting the landlord be content to receive lower wages, if he could get increased comforts. To this I answer that the grievance of the labourer is that the one commodity which he most wants is risen in value, all except corn have remained at the same price, and therefore he can with his wages command more of them all; except this one commodity5 estimated in the mass of commodities, his wages are really increased.
In the former case, estimated in the mass of commodities the landlord’s rent was lowered,—it was increased only if estimated in one single commodity.
In the same manner if population &c.If labourers required less corn wages one can easily understand why their employers should be willing to employ the additional corn capital, which wd. revert to them, in manufactures6 ; but one can see no reason why they should be induced to cultivate more, and poorer7 land. Why produce more of a commodity, if the consumption of it be not increased?
All that is necessary &c.I quite agree with Mr. Malthus in the principle here laid down, but I should think it a great error to say that wages had fallen, when it was agreed that the labourer “had an increased proportion of the value of the whole produce obtained by a given quantity of capital.[”] Value is I think measured by1 proportions.
Mr. Ricardo has observedMr. Malthus asks me where the high real wages of America will finally go? I answer they will go with almost the whole of the rest of the surplus produce to rent. But the question is what are the successive steps by which they will arrive at rent. First, they will, when they fall, raise profits.—High profits lead to new accumulations—new accumulations to an increased demand for labour, to an increase of people—to the cultivation of poorer land and finally to an increase of rent.
Mr. Malthus is for jumping over these intermediate steps, and leads his reader to conclude, that every fall of wages, and the effects of2 every improvement on the land, are immediately transferred to rent. In this instance, I represent the landlords in a more favorable point of view than he does.
But it is obvious &c. &c.This is correct provided there be a demand for the produce—that is absolutely essential to increased cultivation. Mere quantity of produce will not compensate the producer.
The third causeHere expences of producing are compared with the price of produce—this supposes an adequate demand for the produce. The question in dispute is taken for granted.
If the improvements were of such a nature &c.How can the cost of production be reduced without increasing the quantity of produce, or1 without lowering price? The supposition involves a contradiction.
The manufacturers are making low profits, and the farmers high ones, what is to make their profits meet? The reduction of the price of corn which would infallibly be effected without any more capital being employed on the land. What is meant by an improvement? I do not understand the meaning of the word if it be not that with the same quantity of labour a greater quantity of produce2 can be obtained: although then the price of produce should fall, profits would rise, because the whole produce, at a low price, would be worth more than the former whole produce at a higher price.
But the cost of labour would fall with the fall of corn, consequently profits would finally settle at the proportion between the corn expended and the corn obtained. How could rent rise? Would any thing raise rent but taking poorer land in cultivation? But you might take poorer land into cultivation because profits are higher! true you might, but would you, till your population had increased, seeing that the very improvement gave you such an additional supply that you would be induced to take capital from the land to manufactures? But how would the profits of manufacturers be increased? By the fall in the price of labour— their commodities would have the same exchangeable value in relation to each other and to money3 as before, but the price of producing them would be reduced. My conclusion then is in direct opposition to that of Mr. Malthus—profits on all capital employed in agriculture and manufactures would be high, and rents instead of rising would fall, because capital could not be added to the land, but would in all probability be withdrawn from it.
But if these improvementsAnswered.
And the power of the necessaries of life &c. &c.The proof is very far indeed from satisfactory. To prove that corn raises up demanders it is said that wages have not materially altered. This no more proves that corn has raised up demanders, than it proves that demanders have raised up corn, or been the cause of its being raised up.1
It may be added 0026;c.This must depend upon the degree of improvement in those districts. If the supply from those districts were very greatly increased, rent might be raised on the renewal of leases in them, but it would generally fall in other places, and so would also the price of corn; for the worst land would be thrown out of cultivation.
If a great and continued demand &c.The price of corn would rise very high, for a time, but whether the rise would be permanent, would depend on the quality of the soil from which the additional quantity should be obtained.
If it were no worse than that already in cultivation, prices would finally settle at their old prices, and profits would only for a time be higher than before. But if worse land was taken into cultivation, the price of corn would rise, and profits would be permanently lower1 . I do not know how any fall is to take place in the value of money, but I believe Mr. Malthus would call that a fall in the value of money which I call only a rise in the price of a commodity. Every rise in the price of corn he calls a fall in the value of money, altho’ money should exchange for precisely the same quantity as before of every other commodity—I should call it a rise in the price of corn, without the slightest variation in the value of money. Money I think only falls in value, when it will exchange for less of all things; not when it will exchange for less of one thing, or of two things, or of a dozen things. There is a marked difference, which Mr. Malthus’s language has not provided for, between a rise in the value of a commodity, and a fall in the medium in which value is estimated. Mr. Malthus would agree that if the demand doubled for hats,2 though they would at first rise, they would finally be supplied at the old prices in the requisite abundance, unless the expences of production became greater—why would it not be the same with corn?3 Mr. Malthus concludes this passage by saying that labour would become extremely productive in the purchase of all foreign commodities; and rents might rise without a fall of profits or wages. I think it can be demonstrated that rents could not rise even under the circumstances of this increased demand, unless the expences of production were reduced, or new land of an inferior quality were required to afford the supply.
The state of money prices &c.Here is a mixture of facts and of argument. The facts I must take on Mr. M.’s authority—they appear I confess very extraordinary and I cannot help suspecting some mistake in the statement. “The price of wheat in the eastern states of America is nearly as high as in France and Flanders; and owing to the continued demand for hands, the money price of day labour is nearly double what it is in England.” The land then must be more than1 doubly productive, with the same quantity of labour employed on it, or profits in those states must be lower than in England, for the price of the produce is considerably lower in France and Flanders2 than in England.
It is undoubtedly true that if a country is to pay a certain money price for foreign necessaries and conveniences, it is for its interest to sell the commodity which it exports at a high, rather than at a low price; it is desirable that for a given quantity of its own commodity, it should obtain a large rather than a small quantity of foreign commodities in return, but in what way a nation can so regulate its affairs as to accomplish this by any means which it is in its power to adopt, I am totally at a loss to conceive. All trade is in fact a trade of barter, and if money can by any laws be so distributed or accumulated as to raise the price of exportable commodities, it will also raise the price of imported commodities; so that whether money be of a high or of a low value, it will not affect foreign trade; for a given quantity of a home commodity in either case will be bartered for a given quantity3 of a foreign commodity: If the exportable commodity wheat4 had been at a low price in the Eastern States, while the foreign commodities were at a high price, those states would not have been so prosperous, because they would not have made such advantageous exchanges. This appears to me to be the substance of Mr. Malthus’s observations. If countries had the power of regulating prices they would all sell at high prices and buy at low ones.5
Effects of a similar kindThe price of grain in England rose from two causes; one, which was common to all other commodities, the fall in the value of the medium in which price was estimated; this rise was merely nominal, and was occasioned by the depreciation of paper money. The other cause was, as Mr. Malthus states, the increased expence of importing corn. On a comparison of the expence of growing our corn, and importing it, it was found cheaper to grow it than to import it, but with a given expence1 less corn was obtained, than we could before import, and so far the change was highly disadvantageous to England. For a time indeed, from the urgency of the demand for this prime necessary of life, its value might be sustained in the market at a price greatly exceeding its cost of production,2 or natural price; and during such time agricultural profits might be high; but it would be very unsafe from such a circumstance to infer any general rule that such a change from importing to growing corn, not from choice, but from necessity, was not very injurious to the interests of the country3 for it must be remembered that these high profits were and could only be at the expence of the consumer.
But it seems that we derived a compensation from the general rise of the prices of our commodities! By what was this general rise occasioned? Not by our growing our own corn, that may raise the price of corn but will not raise the price of any other commodity4 . Corn rises5 comparatively to other things, on account of the increased difficulty of producing it.
Suppose money now to fall in value, not only commodities, but corn also, will rise in price; but the one rise in corn is totally independent of the other. The one rise is owing to the difficulty of production and is confined to corn and agricultural produce, the other is owing to a fall in the value of money and is common to all commodities. This second rise is only nominal, and if it be caused by a depreciation of paper money, which is partial to this country, though goods and corn may rise 20 p.c., bullion will also rise in the same degree, and the exchange will be proportionally against us, so that in all our transactions6 with foreigners we buy of them as dear and sell to them as cheap as if no such rise had taken place. That rents would rise when we ceased importing corn is precisely what would be expected—poorer soils would be taken into cultivation which never fails to raise rent.
The peculiar circumstances under which we were placed, sunk, according to Mr. Malthus, the value of the precious metals in this country as compared with their value in other countries1 . Money was depreciated then, because it was not of equal value with bullion, but it was in addition to this cause of still lower value than before, compared with commodities, because bullion was also lower in comparative value. Now I have always understood that in the differences on the Bullion question Mr. Malthus took a middle course, and ascribed the apparent fall in the value of paper, partly to a real fall in the value of paper and partly to a real2 rise in the value of the medium (bullion) with which it was compared. He said,3 that the merchants were partly right, because the difference between bullion and paper was owing partly4 to a rise of bullion—the bullionists were also partly right because the difference was also owing to the fall of paper; now, however, he tells us that the value of bullion fell in this country, and therefore that the bullionists hardly pushed their argument so far as it would go. How does he reconcile the opinion, given in this passage, to that expressed in Page 6 of the same work. “I have always thought that the late controversy on the bullion question presented a signal instance of this kind of error. Each party being possessed of a theory which would account for an unfavourable exchange and an excess of the market above the mint price of bullion, adhered to that single view of the question, which it had been accustomed to consider as correct; and scarcely one writer seemed willing to admit of the operation of both theories.” Now what were the two theories. [“]Bullion has not varied said one party, and the variation in the price of gold has been owing to a fall of paper.” “Paper has not varied” said the other party [“]and the variation in the price of gold has been owing to the rise in the value of gold.” The truth lies between said5 Mr. Malthus; yet he now maintains not only that gold had not risen, as some of the bullionists, I think erroneously,6 contended, but he contends that it actually fell.
A fall in the value of money cannot indeed be peculiar to one country without the possession of peculiar advantages in exportation.In this opinion I partly concur, but it is necessary to understand what the nature of this peculiar advantage is. Competition at home will keep our commodities at the price at which we can afford to sell them, but that price may be much lower particularly with respect to a few commodities2 than foreigners can make them for, and therefore if they could not obtain them at our cheap prices, they would be willing to pay a much dearer3 price for them. The great facility of making cotton goods, which cannot perhaps be rivalled in other countries, would, but for our domestic competition, enable us to charge a higher price for them. We may be in possession too of very productive mines, and the metal we obtain from them, may be, from the same cause, sunk below the value which foreigners would readily, and willingly, give for it. What means then have we of charging a higher price for these peculiar commodities. One we have which is evident, and very certain in its effects. Government may4 lay a duty on the exportation of such commodities, which will not fail to raise their price to the foreign consumer, without any injury to the home manufacturer.
There is another method which is however doubtful in its effects, and it is to this to which Mr. Malthus refers.
By restrictions on the importation of corn, it is said, great encouragement will be given to the importation of bullion, which will sink its value as compared with corn and labour, and will raise the price of all home made commodities. The natural price of all these commodities will be also raised, while no such rise will take place in the natural price of all foreign commodities;—on the contrary as bullion will be sent from foreign countries, and its value be raised, the natural price of the commodities of those countries will be lowered, and thus in all our foreign trade, which is always finally a trade of barter, we shall obtain more foreign commodities in exchange for a given quantity of ours. Now the justness of this argument depends upon this, whether a low value of money, as compared with corn and labour, peculiar to one country, is necessarily attended with a low value of money, compared with other commodities;—whether, in short, it will raise the natural price of our home made commodities, for it is only in that case that we can be benefited. Money, I think, cannot, from the cause which we are now discussing, be so lowered in value, relatively to our domestic commodities, unless our demand for the commodities of foreign countries is in some degree exhausted, and we therefore refuse to take any more of their commodities in exchange for ours, while they are willing to take more of ours in exchange for theirs. In that case money will be imported in unusual quantity, for it is the only condition on which foreigners can obtain the required quantity of English commodities, and they will consequently rise. At the same time corn and labour will have a further rise—they rose first on account of the increased difficulty of producing corn, and secondly on account of the increased quantity and low value of money. On these conditions it is undoubtedly true that by refusing to import so valuable a commodity as corn if its place cannot be supplied by other articles of foreign production, and we have peculiar facilities in the manufacturing of commodities in very general demand the trade of barter, or foreign trade will be peculiarly favourable to England.
We shall sell our goods at a high money price, and buy foreign ones at a low money price,—but it may well be doubted whether this advantage will not be purchased at many times its value, for to obtain it we must be content with a diminished production of home commodities; with a high price of labour, and a low rate of profits.
Such a sacrifice is in every view unpardonable, if, as I have shewn, the same benefit can be obtained, without prohibiting the importation of foreign corn, by simply imposing a duty on the exportation of those commodities, in the production of which we have either peculiar skill, or derive peculiar advantages from climate or situation.
We must not forget too that in imposing restrictions on the importation of corn it is doubtful whether the advantage is obtained at all, because bullion will not as I said before be imported—will not sink in general value in this country, while we are disposed to accept foreign goods in payment for our domestic commodities.
The whole argument assumes too that we have commodities which would bear a high value in foreign trade, but are kept at a low value by the effects of domestic competition.
If then my statement is correct Mr. Malthus proposition is much too general, for money may be, and frequently is peculiarly low in value, compared with corn and labour, in one country, without being low compared with all other things; in which case it would have no advantages whatever, to compensate it for a high value of corn and labour, in the exportation of other commodities.1
What is it in the case of the Eastern States of America which gives them the advantages ascribed to a partial fall in the value of money?2 Is it because their corn is nearly as high as in Europe, and the wages of labour twice as high as in England? These are not circumstances peculiarly favorable to the exportation of the commodity they produce.
It is never the fall in the value of money, but a rise in the value of corn, which will occasion the cultivation of poorer land.
If for instanceHere,3 two or 3 things must concur, which do not usually happen at the same time. We are to have improved modes of agriculture, which of course will increase the quantity of produce obtained with a given quantity of labour; and yet the labourer is to have less produce4 given him for wages. We are then to have increased quantity, with a diminished consumption, and a higher price—these are things which I do not know how to reconcile.
In this case &c.It must not be supposed from any thing I have said that I deny the possibility of rents being higher, tho’ profits may not be lower, than at an antecedent period, when rents were lower. What I say is this, improvements in agriculture raise profits,—population increases, cultivation is extended, and rents rise—profits then fall, perhaps not so low as before perhaps lower5 ; but profits are the fund from which all rent is derived. There is no rent which did not at one time constitute profits.
But whenever by the operation &c. &c. rents naturally riseBut by no means necessarily; the value of the surplus produce rises, and this may be added to profits. All other profits must increase at the same time.
It is equally trueIn almost all that Mr. Malthus says in this, and the following pages, to the end of the section, I most fully concur. We should agree as to the final results, but we differ greatly in our opinions of the steps by which the final results are brought about.
They are all indications of poverty and declineNot all. To allow the free importation of corn, would lower rents, but would be no indication of poverty and decline. Continued improvements in agriculture might throw lands out of cultivation for years, till the population could come up to1 the increased means of providing for it. This would be no symptom of decline. The adoption of a cheaper food would throw land out of cultivation, without being necessarily accompanied with poverty, for the people might have a greater desire for articles of dress and furniture, and might expend what they saved in the article of food, on these enjoyments. This would not be poverty and decline.2
It may be stated in like mannerIt is not necessary to repeat my objection to this theory.1 Of course I allow that if the fall was occasioned by the free admission of foreign corn, rents would fall; this would not I think be an evil but a benefit.
If the fall took place from a rise2 in the value of money it would affect every thing alike, and is only injurious as it increases the weight of taxation. This however is not an unmixed evil—the stockholder gains what the other classes lose, and he may if he pleases make as good use of it. Whether he will or no is matter of opinion. Why an alteration in the value of money should impoverish a state, or why it should throw land out of tillage, or diminish corn rents, rents in3 Mr. M.’s standard, I do not clearly see.
In the natural progress of decline &c. &c.All just theory would lead to the very opposite conclusion. Labour would be cheap, because the population could not fail to be redundant. Produce would be dear as compared with labour, because with the diminished capital less would be produced and the same number of men would be willing to work for it.1 Rents would be low, because none but the best lands would be cultivated. What can be more favorable to high profits than low wages, and low rent2 ? Be it remembered too that they must be estimated in Mr. Malthus’ medium labour, of which they3 would then have a great command.
If the doctrine here laid down &c.The4 society is interested in having a large neat surplus from the land—it is also interested in having this large neat surplus sold at a cheap price. If corn be sold at a low price it is a proof that profits are high on the land last taken into cultivation. If sold at a high price it is equally clear that profits are comparatively low5 , and the high price is the means by which the consumer of corn provides a rent for the landlord.
The landlord can not controul this—he can not make the last land taken into cultivation comparatively poorer than his own, and therefore he is a passive instrument, but nevertheless it is owing to this circumstance that the transfer is made from the consumers pockets to the landlords. In proportion as the last land taken into cultivation is more productive, are the people better off. They6 are better off because they can purchase the same quantity of produce at a cheaper price,—that is to say with a less quantity, or with the produce of a less quantity of their labour. The capitalists are better off because in proportion as the people are cheaply fed will wages be lower. Low7 wages are another name for high profits.
With regard to my own convictionHow1 can Mr. M. give the interpretation which he does give to the word injurious. My meaning was, and so I am sure was that of the other gentlemen who used this word,2 that rent was not a clear gain to the nation—it is necessary to the actual supply of corn, but it is derived from a3 fund, which must diminish if that increases.4
Or to the cost of raising &c.Why little? No rent would be paid for the additional capital employed on old land. Mr. M. refuses to admit, that any corn would be raised, in which rent did not enter as a component part. If he is correct in saying that a little rent would be paid for the last portion of5 capital employed on the old land, he is right—if no rent would be paid for it he must confess his error. I wish therefore he had given his reason for supposing that any rent would be paid for capital so employed.
Mr. Malthus appears to me to give up the question in the next paragraph for he says “it will always answer to any farmer who can command capital, to lay it out on his land, if the additional produce resulting from it will fully repay the profits of his stock, although it yields nothing to his landlord”. There may then be some additional produce which yields no rent to the landlord. In examining the principles of taxation this doctrine is most important, and indeed is material to every part of the science of Political Economy.6
Owing to this part &c.It should be, “produced at the same expence while its exchangeable value considerably increases.”
The difference between the price of corn &c.This and the observations in the next two pages are excellent.
In these cases it is obviousRents would in this case be regulated by the different products of capital on the same land. With a rise in the price1 of produce it would be advantageous to employ some more capital on the land2 with a less return than the capital before employed—this would be limited by the demand for corn, and the most favorable situation would naturally be chosen; I do not see then how my inference has been too large, particularly if it be remembered that I have uniformly contended that one of the main causes of rent is the employment of an additional capital on the old land, without as large a return, as from the capital before employed.
In the progress of cultivationMr. Malthus is mistaken, he has not correctly represented the inference. It has been inferred that profits will be high in proportion to the produce obtained by that portion of capital which the cultivator will think it his interest to employ, either on the new land, for which no rent is paid, or on old land, if the additional capital be employed only with a view to profits,3 and this inference is rigidly true only on the supposition that wages continue unaltered, for with an increased produce and a diminished rent, or a diminished produce and increased rent, a greater or less proportion of the whole may be paid for wages, in which case though profits will rise or fall, they will not rise or fall exactly in proportion to the increased or diminished produce.
If land yielded no rentBut what does Mr. Malthus say to capital withdrawn from land which yet remains in cultivation and for which no rent is paid. By withdrawing this capital will not another capital come under the same condition of not affording a rent although it yields larger returns? On Mr. Malthus own shewing if rent falls, and the land be equally productive, either profits or wages must rise. If this be not true what becomes of the difference between a high and a low rent? Who gets it?
If to this circumstance &c. &c.The2 supposition was that in consequence of importing corn rents fell, and that at any rate the last land in tillage would be more productive, and less rent would be paid for it. Thus much even Mr. Malthus allows. What then can he mean by “the higher rent paid for the last land employed in tillage counterbalancing, or even more than counterbalancing the difference of natural fertility?” Does he mean that if importation of corn3 were freely allowed, although the last land employed in tillage would be more productive, yet greater profits would not be obtained from it because4 a greater rent would be paid than before for it? If he means this he must contend that the more free the5 importation of corn the higher would rents be.
What can the rise6 in the value of money have to do with this question? What should make it rise? and if it did rise how could that circumstance affect the rate of profit? The simple question is this, with a given expenditure of capital and labour a greater quantity of corn is obtained. Of this greater quantity the farmer retains a larger proportion because a less proportion (and indeed a less quantity)1 is paid to his landlord for rent. It is therefore true that although he may sell his corn at a cheaper price he may still obtain greater profits.
But the rate of his profit “must obviously conform itself to the general rate of profits. If the prices of manufactured and mercantile commodities were to remain the same notwithstanding the fall of labour, profits would certainly be raised; but they would not remain the same, as was shewn in the preceding chapter.” Where shewn in the preceding chapter? Observe the argument of Mr. Malthus, and the proposition with which he sets out. “It has been inferred” he says2 “that when land is successively thrown out of cultivation, the rate of profits will be high in proportion to the superior natural fertility of the land which will then be the least fertile in cultivation.”*
This is an incorrect3 inference says Mr. Malthus. Why? because though rent may fall in consequence of the importation of cheaper corn from other countries, it will not be attended with a loss of the whole rent even on those lands which are the poorest employed in tillage.
Suppose we grant this to Mr. Malthus, yet his admission that rent will fall, altho’ not wholly annihilated on any land whatever, fully makes out the proposition. But Mr. Malthus grants a great deal more than this; he says, not only do I admit that rent will fall, but I think labour will fall, and yet I contend that the farmer’s profits will not rise— 4 because they must conform to general profits, and with a low price of labour, other commodities must fall and therefore the profits on capital employed on their manufacture would not rise.5 With a given capital it is admitted that a greater quantity of raw produce will be obtained, that this quantity must be divided between the landlord, the farmer, and the labourer. The landlord it is acknowledged will get less, the labourer it is said will get no more and yet the farmer will have no greater value. By what is it that Mr. Malthus estimates value? If he says by that measure which he holds to be the correct one, “the command of labour,” he is evidently maintaining a contradiction, for he says that labourers will work for the same quantity of corn as before, and yet he who has more to bestow on them has no greater value. If he says that his measure of value is1 “other goods,” and that a man has not a greater value, unless he has the power of commanding a greater quantity of those goods, he is still maintaining contradictory propositions2 , for one part of his argument requires him to maintain that the farmer will have the power of commanding a greater quantity of other goods; and another that he will not have the power of commanding so great a quantity as before. If the farmer can command more goods, and goods are the measure of value, then he has a greater value, and his profits will be increased, and the inference Mr. Malthus attacks is a correct one. If he cannot command more goods in consequence of the very low price of his corn then the manufacturers goods do not fall but rise, and as labour is low general profits will be high. The manufacturers profits can be no otherwise than high if he can exchange his goods for the same quantity of all other commodities, and for a greater quantity of raw produce, and if at the same time he pays lower wages of labour, in consequence of the fall of the price of corn. To me it appears clear that the price of corn will fall, but that the fall will be more than compensated to the farmer, by the increase of quantity, and thus his profits will be increased. The profits of the manufacturer will be also augmented, because he will sell his goods at the same price, while in consequence of the fall in the price of corn, he will be at less expence in producing them.
Mr. Malthus cannot be allowed to say that corn and manufactured goods would fall as compared with money, because first he gives no reason for such fall, and secondly if he could establish it to everybody’s satisfaction it would only prove that money had risen in value and affected every commodity alike, which would have no influence whatever on the rate of profits. Its effects would be precisely similar to those which would follow from the loss of some of the rich mines3 of the precious metals, or from the recovery4 of a paper money from a great degree of depreciation.
It should be addedNo point is more satisfactorily made out to my satisfaction1 than that high profits have a most intimate connection with the low value of food,—for a low value of food has the greatest influence on the wages of labour, and low wages cannot fail to make high profits.
Suppose I was a manufacturer of cloth, and that I made 100 pieces p.t Ann., and that food was so high compared with cloth, that it was necessary for me to give 60 pieces to my workmen, to enable them to purchase necessaries; 40 pieces would remain for me. Now suppose the comparative price of food to fall, and that 50 pieces would purchase the necessaries required by my men, would not my portion be increased 10 pieces?
But your 50 pieces of cloth may fall in value, and sell for no more than 40 did before!—this cannot be true with regard to corn and labour, because by the supposition they have fallen in value, and are low compared with cloth; therefore if I wanted to employ labour of any kind with my 50 pieces of cloth, they would go considerably further than even 50 pieces went before. But they will not fall relatively to any other commodity; for the shoemaker, out of a hundred pair of shoes, will retain 50 instead of 40, the brewer out of a hundred barrels of beer, will do the same, and so will every other trade. The cause that operates on one, operates on all; how then can it be said that the relative values of commodities will be affected? But it may be said that though corn falls relatively to all these things, wages will not fall; this is still better, because without lowering profits, the happiness of the most numerous and therefore the most important part of the people will greatly increase.
In the progress of a countryI think the landlords relative condition to the capitalists will gradually improve with the progress of a country, although his rent will certainly not increase in the proportion of the gross produce.
There is no just reason to believe &c.This is my opinion, but ought not to be that of Mr. Malthus;1 who contends that rent enters for something into the price of all corn. However little it might be on the corn last raised; to that degree would corn fall, if all rent were given up.
From what Mr. Malthus says here, and in another place,2 one would think that he admitted there was some corn always sold, in the price of which no charge for rent entered;—but he more often insists on the contrary.3
They are in consequence more frequently &c.Mr. Malthus would find it difficult to prove this. What taxes on the capital1 of the farmer do they pay?
Yet it has been saidI have answered this 2 to which I refer the reader. I will only observe here that Mr. Malthus must recollect the qualification which I give to the opinion which he has quoted from my work—I have said that it is only the immediate interest of the landlord which is at variance with improvements in agriculture, and the reduction in the cost of production of corn. Inasmuch as the power of the land, as a machine, is improved, the landlord will be benefited when it is again called into action; and that it infallibly will be after the population has increased in proportion to the increased facility of producing food.
But it is of no sort of useA principle is either true or false—if true it is as applicable to a limited society as to a large one.1 It is my opinion that rent is never derived from any other source than from the fund which once formed profit, and therefore that every improvement—every reduction in cost of production, whether they be great, or small, either go to wages, or profit, and never to rent. After constituting profits, they may be, in the further progress of society, transferred to rent.
1Consequently these rents &c. &c.Who said that the present rents were a transfer from profits and wages, as they existed nearly a century ago?—they may be a transfer from profits of 10, 5 or 3 years ago. The question is, are they a transfer from profits? There is much in this section in which I agree, but it appears to me that Mr. Malthus endeavors to magnify the difference between us.
Mr. Ricardo &c.I do not think that a fair construction of what I have written will justify this charge.
In reference to this statement &c.It is odd enough that Mr. Malthus most frequently uses this very standard which he thus reprobates;—he invariably speaks of the fall of rents, rise of profits, and rise of wages: meaning a fall or rise in money rents, profits and wages, which money1 of course he supposes not to have varied. Now if the quantity of corn produced by a given quantity of labour were doubled, (a very extravagant supposition), its price would fall to one half, and consequently the money rent of the landlord would fall, unless he had double the quantity; the profits of the capitalist would be reduced, unless he had also double; and so would the wages of the labourer, if he had a less portion than double also2 . That the labourers wages would be reduced in money value I can have no doubt, and the chief advantages to the capitalist arise from that circumstance.
But the landlord can with his double produce command more labour than before. So he can,—but is labour the only thing he wants? can he command with his double quantity of corn more iron, copper, gold, tea, sugar, hats, coaches, silks, wine, and every other commodity? Not the least particle more. Am I not then justified in saying that he receives no greater value, though he may receive double the quantity? “In applying this language to our own country, says Mr. M., we must say that rents have fallen considerably during the last forty years, because though rents have greatly increased in exchangeable value,—in the command of money, corn, labour and manufactures it appears, by the returns to the Board of Agriculture, that they are now only a fifth of the gross produce, whereas they were formerly a fourth or a third.”1 Mr. Malthus has not read what I have said on this subject with his usual attention, or, in the first place, he would not have said that my language “requires us to say, that the rents of the landlord have fallen, and his interests have suffered, when he obtains as rent above three fourths more of raw produce than before.” If I estimated the riches of individuals, by the value of their incomes—there would be some foundation for the charge, but I have taken great pains to explain my views, and to shew that I think it quite consistent to say that the riches of a man have increased, viz. the quantity of the conveniences and necessaries of life, which he can command, at the same time that the value of those riches may have2 fallen.
Besides, I have never maintained that in order to give the landlords rents of the same value, they must always bear the same proportion to the value of the gross produce obtained from the land, as the argument from the returns of the Board of Agriculture would imply. I do not say that rents have fallen in value, because they were formerly a fourth or a third of the gross produce, and are now only one fifth. I have a farm from which I obtain 360 qrs. of corn, and I pay one fourth for rent, or 90 qrs. By employing more capital on inferior land, instead of 360 qrs. being obtained with the same quantity of labour, only 340 can3 be got, and therefore the rent of the land on which 360 were obtained, would rise from 90 to 110 qrs.; the rent on that particular farm would be a greater proportion of the gross produce than before, but it by no means follows that it would be a greater proportion of the whole gross produce of the country; for instead of one capital being employed to obtain 340 qrs. one hundred equal capitals may be so employed. It is possible then that the gross produce may be increased 34,000 quarters, and rent rise only 20 qrs. Because the landlord had one fourth of the gross produce, and has increased that proportion on all lands before cultivated, does it follow that I am bound to maintain that rents are also a larger proportion of the whole gross produce from all the lands in the country?
In reference to labour, we must say it is low in America &c.To obtain 180 quarters of corn in England worth £700 on the land last cultivated1 —I may require the labour of 20 men for a year at 10/- a week altogether £520 per ann. To obtain the same quantity in America where it might sell for £600, might require only the labour of 15 men, wages might in America be also 10/- pr week, but the farmer in England would pay £520 pr ann. for wages, and the farmer in America only £390. In one country England the proportion of the whole produce paid to the labourers is .—In the other America it is . Tho’ the money wages to each individual is the same, the aggregate of wages paid is greatest in England, and so also is the proportion of the produce. Apply the same statement to Sweden and it will be found quite consistent with my principle.2
Mr. Ricardo has himself expressly statedIt is very probable that my language about proportions may not have been so clear as it ought to have been. I will endeavor now to explain it.
Suppose the last land now in cultivation yields 180 qrs. of corn with the employment of a given quantity of labour, and in consequence of the rise of the price of corn a still inferior quantity of land shall be cultivated next year which shall yield only 170 qrs. If this year the labourer shall have one third of the 180 quarters, and next year he shall have one third of the 170 quarters, I say his wages will be of the same value next year, as this, because the whole 170 quarters next year will be of the same value as the 180 quarters are this year, and consequently ½, a fourth, or a third of either of these quantities will be also of the same value.
When I speak of this division by proportions I always apply it, or ought to apply it, (and if I have done otherwise, it has been from inadvertence), to the produce obtained with the last capital employed on the land, and for which no rent is paid. Now in fact the labourer will get a larger proportion of the 170 qrs., than he got of the 180 qrs., he will get a larger proportion of this equal value, and therefore it is that I say his wages have risen. Whatever may be the quantity of corn obtained by the last capital employed on the land, it will be of the same value, because it is the produce of the same quantity of labour. A larger proportion of this equal value must itself be a larger value.1
My measure of value is quantity of labour—rent rises only when the sum paid requires more labour to produce it. Ten men on the fertile land can produce 180 qrs.—on land less fertile only 170—if the 10 labourers then receive one half of the latter quantity, or 85 quarters, they receive what 5 men’s labour can produce; the 10 men producing the 180 quarters receive no more; but 85 quarters on that land is produced with less labour, than that of 5 men. True, but the value of corn is regulated by the quantity produced with the capital least advantageously, and last employed on the land2 , the advantage possessed by the holder of the better land, partakes of the nature of a monopoly, and therefore the value of the reward to the labourer must be measured not by the quantity of labour required to produce 85 quarters on the better land, but by the quantity required to produce it on the worse. Mr. Malthus says “Improvements in agriculture tend even according to the concessions of Mr. Ricardo to increase the proportion of the whole produce which falls to the landlord’s share” I do not know where I have said this, but I wish to correct the passage if I have fallen into this error3 by substituting the word used by Mr. Malthus “portion” for proportion4 , or if the word proportion be retained, it must be the proportion of the produce obtained on the more fertile lands.5
But in fact, &c. &c.After saying so often as Mr. Malthus has done, that I have represented improvements in agriculture, as hurtful to the interests of the landlord, and that on this opinion I have grounded my assertion that the interests of landlords are opposed to those of the other classes of society, he here1 states that I have admitted that improvements in agriculture tend, in a moderate time, to increase the proportion of the whole produce which falls to the landlord’s share. Why then have I been charged with holding a different doctrine?2
Under the most unfavourableThere is this manifest and3 important difference. The individual interests of the manufacturer of woollen, silk, or linen goods, might be injured by foreign competition, and they might be obliged with a4 loss to remove their capitals to other branches of trade, but still they would have a capital and a5 revenue, not much inferior to what they had before. The rent of the landlords of the inferior lands would cease altogether, and those of the landlords on the better lands, would be much reduced, if the utmost freedom were allowed to the importation of corn.6
There cannot be a greater mistake than to suppose there is any analogy between the interests of landlords, and those of manufacturers, as they are respectively affected by restrictions on the importation of raw produce, and restrictions on the importation of manufactured goods. Their interests rest on totally different grounds. A manufacturer never can, whatever may be the restriction on importation, get, for any length of time, more than the general and ordinary rate of profit on his capital, and therefore1 if he could easily remove his capital from one trade to another his loss would be inconsiderable, from the removal of restrictions.
But to the landlord it is a question of rent or no rent—of the possession of a useful machine, or one of no use whatever. It is not the situations of the landlord and manufacturer that are in the least analogous, but the situations of the farmer and manufacturer. In their cases indeed the analogy holds good.
2Let us suppose &c.—Mr. Malthus is here a little inconsistent with himself. He estimates the advantage to the state by money value, and will not employ, as he ought to do, on this occasion, his own measure of value, corn and labour. Suppose Mr. Malthus could demonstrate, which he cannot do, that we have made the same money profits by employing a given capital at home in agriculture as we should have done with the same capital3 if importation had been freely allowed. I might answer him; “if importation had been permitted and you had allowed corn to be cheap; with the same money capital I could have employed much more labour—I could also have done the same with the same money revenue, therefore by not permitting free importation you have deprived us of all the commodities which this additional quantity of labour could employ.”1 Against this solid advantage Mr. Malthus puts the permanent2 improvements which tenants make to the lands they rent, and which they cannot again take away, as they become permanently fixed on the soil. It may be doubted whether the expectation of these trifling advantages are not always allowed for in agreeing for rent, and whether they do not3 really constitute a portion of the landlord’s rent.
Others can judge better than I can do of the value thus left on the lands by tenants at the expiration of their leases. I am not disposed to estimate it very highly. If the power of commanding labour be the measure of value, value must depend on the quantity of necessaries, and not on their money value.
Sir John Sinclair, &c.Does Mr. Malthus believe that the freest importation of corn would deprive us of any particle of the quantity which we now derive from that farm? As for the great rent upon it being derived from capital accumulated upon it by tenants I cannot help being sceptical on this subject.
If then during the warHere again the estimate is made of money profits, but I require that in both instances the money profits should be reduced into the power of commanding labour and commodities.4 I do not want to know what value we could5 have obtained in the two cases, but what riches we might have got,—what means of happiness to the community!
And this in factTrue if estimated in corn returns, and not in money returns. The only question of importance, in fact, is, whether we could buy our corn at home or abroad at the least expence of capital and labour—1 and we are to judge of this only by a comparison of the quantity we can import with a given capital and the quantity we can grow with an equal amount of capital. It is by quantity and not by money value that we must judge. We may make any thing of a high money value, by rendering it scarce.
If restrictions upon importation &c.It is only because they do so, that they are attacked. Can any man doubt of their having this effect?
Their policy on other grounds is a different question. I confess on those other grounds the arguments in favour of restrictions have2 very little solidity in my view of the subject.
But if the progress of wealth &c.Grant this indeed, and the conclusion follows.
The position here laid downTo me it is very startling, and I believe wholly unfounded.
I refer to exchangeable value and rate of profits, not to abundance of conveniences and luxuriesIf this be the case, if you even made out your proposition it ought to have no effect on our practice. We care little what the nominal exchangeable value of our goods may be, (and I should say, their real value1 either;) what we are anxious about is to possess an abundance of conveniences and luxuries. If then every word you have said be true, we are for an unrestricted corn trade, if it is to give us a value no matter, whether high or low, which will give us an abundance of conveniences and luxuries.
But again I ask what is become of Mr. Malthus’s measure of real value in exchange—we were told that it implied a certain quantity of necessaries and conveniences and that things rose and fell in exchangeable real value as they would sell for more or less of these conveniences and necessaries— then as it was supposed that a certain quantity of necessaries and conveniences would command always a certain quantity of labour—labour was selected as the measure of value:— this underwent another correction, as labour was acknowledged to be variable; it was desirable to introduce another commodity, which it was alleged was also variable, but variable in another direction, and therefore as the variation of one would correct that of the other, a mean between the two it was said would give us an unvarying measure of value2 , accordingly the final measure of real value in exchange was settled to be a mean between corn and labour.
It must be confessed that it has not hitherto been often referred to, and in the present argument it appears to be given up altogether for we are told that exchangeable value is referred to, not abundance of conveniences and luxuries.3 We are quite at a loss to know what is here meant by exchangeable value. It cannot be corn and labour, for they are considered as I have just shewn, of exactly the same nature as conveniences and luxuries. I strongly suspect that the reprobated money value is meant, if so, Mr. Malthus must agree with me that there is a very marked distinction between value and riches: value depends on the cost of production, riches on the abundance of productions.
To shew that what may be called &c. &c.In many parts of Mr. M’s work this opinion as applied to commodities is enforced, but I do not know by whom it is called in question. Natural price is another name for cost of production—while a commodity will sell in the market for its natural price or above it, it will be supplied, the cost of production therefore regulates its supply. Mr. Malthus says the demand compared to the supply regulates price1 , and the cost of producing the commodity regulates the supply. This is a dispute about words—whatever regulates the supply regulates the price.
If one species of labour &c. &c.That is to say will make men willing to give more for it, but its value will not be regulated by this willingness but by the supply which will again depend upon the interest which fathers may feel to give their children this dexterity and ingenuity and the cost of giving it.1 If it could easily be given by labourers to their children and at little cost, it would have little value however much it might be esteemed.
Mr. Ricardo has defined &c. &c.I have done so that we may have one common language to apply to all cases which are similar. By natural price I do not mean the usual price, but such a price as is necessary to supply constantly2 a given demand. The natural price of corn is the price at which it can be supplied affording the usual profits. With every demand for an increased quantity the market price of corn will rise above this price and probably is never at the natural price but either above or below it,—the same may be said of the natural price of labour.1
If the fall be considerableHow can it fall unless from increased supply, diminished demand or cheaper cost of production?1 If it be from diminished demand, the labourers must have been thrown out of work before, and their not being employed cannot be attributed to this cause. If the supply be increased without any diminution of the supply of other things, it cannot diminish the power of the country generally to employ labour, but on the contrary must increase it.
It may diminish the power of the farmer because he must make good a money rent, and therefore with an increased quantity of produce he may have less power of commanding labour, after the payment of his rent, than he had before. But if he have less, someone must have more. The landlords rent would enable him to employ more labour. If the capitalists retained the same money capitals2 they might with the same money employ more people if wages fell, and yet the labourers might be better off than before. If money wages did not fall, still, more labour would be demanded, because the same money wages would purchase more commodities and food together and therefore give more encouragement to labour. If nothing else were required more millers would be wanted to grind the corn, more bakers to bake bread, and more cooks to make pastry. If the cost of production of corn were reduced, it would fall, without an increased supply, but less3 labour could not be required in the country4 —because in proportion as less labour was bestowed on the production of corn more would be devoted to the production of other things.5
The command of the labouring classesIf it be meant that a mere fall in the price of necessaries is not of itself a cause of an increased demand for labour, and of placing the labourer in a situation really better than before, there can be no dispute about it, because money may alter in value and corn may at the same time become scarcer. The money price of corn would fall but the money price of labour6 would fall still more.
If money does not alter in value—the fall in the money price of corn must be favorable to the labourer. It can only be caused by abundance and that abundance must be temporary, and7 in consequence of an accidental good season, or it must arise from a more permanent cause8 and in consequence of a cheaper mode of production. A temporary abundance from a very good harvest is not favorable to the1 farmer, but it is favorable to all other classes. The farmer may have a diminished revenue, and even a diminished capital, because his engagements to his landlord are made in money, and a very abundant crop will be worth less money than a scanty one. The landlord will receive no more money rent, but the corn he consumes for his own family and in the support of his horses and cattle will be at a lower price, and he will be benefited by the difference of price. If wages fall, the manufacturers will be benefited, by getting increased profits, as well as by getting the same advantage in their expenditure as that obtained by the landlords. Even the farmer will be in some degree compensated by paying2 lower wages. If wages do not fall the labourers will have many increased means of enjoyment; the chief article of expence with them being cheap, they will have the difference between the sum they before expended on corn, and the sum now required for that purpose, to expend on other things, or to save. If as much is saved by them as is lost by the farmer, the society will be no poorer than before, and even at the former3 average price of corn, in future, the same quantity of labour will be in demand. But if no saving is made by labourers and wages do not fall4 it must I think be admitted that a temporary abundance of corn from a good harvest has a tendency to diminish the effective capital of the country. Not so will a low price of corn caused by the permanently diminished cost of its production. That may also be injurious to farmers,—will also be injurious for a time to landlords, but all other classes receive such permanent benefits from it that the society altogether is more than compensated for these trifling drawbacks.
On this part of the subject it will not be necessary to dwell as I have explained my views on several other occasions.
Mr. Malthus appears to think that under all circumstances, and however caused, a fall in the price of raw produce will be attended with a diminished demand for labour. In one case “so many labourers will be thrown out of work that wages after a period of great distress, will generally be lowered in proportion.” In another “the quantity of the necessaries of life actually earned by the labourer and his family, may be really less than when, owing to a rise of prices, the daily pay of the labourer will command a smaller quantity of corn.”
What is mainly necessary to a rapid increase of populationThe truth of this proposition depends on the meaning which is attached to the word value. According to my view1 the power of commanding labour may increase although the value of the capital of the country may diminish—it depends mainly on the quantity of capital—or that portion of capital which employs labour. Now value according to Mr. Malthus depends on the quantity of necessaries and conveniences. His proposition then is “that population will increase with a demand for labour, and with the means of supporting the labourers”—a proposition that cannot be controverted.
It has been sometimes thoughtThe effective2 demand for labour must depend upon the increase of that part of capital, in which the wages of labour are paid.3 If I have a revenue of £2000—in the expenditure of that revenue I necessarily employ labour. If I turn this revenue into capital, I at first employ the same labour as before, but productively instead of unproductively. This labour may be employed in making a machine, the machine becomes a capital, and all that it produces is the revenue derived from that capital. Or this labour may be employed on the land, and the corn which it produces may be a capital to enable me to employ an additional quantity of labour4 . A society does one or the other in proportion to the demand for either the objects of men’s work; or for objects which are almost exclusively produced by machinery:—in general the capital accumulated will consist of a mixture of both, of fixed and of circulating capital. It appears then that to the person saving capital, it can be of no importance whether it be employed as fixed or as circulating capital; if profits be 10 p.c. they will equally yield a revenue of £200 on £2000 capital, but if it be employed as fixed capital[,] goods to the amount of £250 or £300 may replace the capital, and give the £200 profit—if it be employed as circulating capital it may be necessary to sell the goods produced for £2200, to replace the capital and give the £200 profit. The country, which is enriched only by the net income, and not by the gross income, will be equally powerful in both cases:—to the capitalist it can be of no importance whether his capital consists of fixed or of circulating capital, but it is of the greatest importance to those who live by the wages of labour; they are greatly interested in increasing the gross revenue, as it is on the gross revenue that1 must depend the means of providing for the population. If capital is realized in machinery, there will be little demand for an increased quantity of labour,—if it create an additional demand for labour it will necessarily be realized in those things which are consumed by the labourer.
2If for instance, a capitalist who had[There appears to me to be a fallacy in the whole of this argument. I have a circulating capital of £20000 with which I make goods that sell for £22000—. I all at once discontinue my trade and instead of making these goods I make a machine worth £22,000;—I shall neither be richer nor poorer, for my goods in the one case, and the machine in the other, are of equal value]3
Even in Agriculture, if the fixed capital—to the end of the paragraph.It does not appear to me as a necessary consequence “that the demand for labour and the amount of the population would be greatly diminished.”
Suppose that 1000 qrs. of corn were raised, of which 200 qrs. might be considered as the surplus produce and that of the remaining 800—four hundred were paid to the labourers for their work, and four hundred were used in feeding the horses and oxen employed in the business of the farm. Suppose now, that instead of 1000 qrs., only 9001 were produced, in consequence of the adoption of spade husbandry, and the dismissal of the horses and oxen from the work of the farm.
Of this 950, let 1502 qrs. only be the surplus produce, and let the remaining 800 be given to the labourers in husbandry for their work. Under these circumstances there might be an increased demand for labour with a diminution in the gross and net produce. Whether there would be or not would depend on the quantity of land which such a low rate of profits might throw out of cultivation. It must however be allowed that3 a diminished production is compatible with an increased consumption, by human beings and as in this case the whole quantity produced would be consumed by man, there might be an increased demand for labour although corn should be higher in price and require an increased cost for its production.4
p. 264. note.
Yet as horses must be kept toI mean to give no opinion on the subject of spade husbandry—I am not qualified to do so, but I do not see the necessity of horses standing idle in the stable. The same horses might do the work of various farms—they might be let out for other purposes to which the work of horses is applicable or they might be hired on occasion by the farmer.
On the other handIt might be possible to do almost all the work performed by men with horses, would the substitution of horses in such case, even if attended with a greater produce, be advantageous to the working classes, would it not on the contrary very materially diminish the demand for labour? All I mean to say is that it might happen with a cheaper mode of cultivation the demand for labour might diminish, and with a dearer it might increase.
At the same time it is certainly trueMr. Malthus’s peculiar theory is that supplies may be so abundant, that they may not find a market. This is insisted on in various parts of his work. A very great facility of production, might, under certain circumstances, encourage a habit of indolence, and therefore might be a reason for commodities not being produced abundantly, but it can be no reason, when they are produced, for their not being exchanged against each other. We all like to buy and consume, the difficulty is in the production. One product is bought by another[;] every man will buy if he has a product to give in exchange, and does not value that higher than the commodity offered.
But in this case the general produceThat is to say they might fall in1 I suppose Mr. Malthus measure of real value in exchange, namely, in conveniences and necessaries, but suppose this increased produce consisted of conveniences and necessaries, then they must rise in value, for the value of a standard measure depends upon its quantity.2 Neither could it be said that they would command less labour, unless labour rose in value, because the command of labour must depend on the means of paying for it, and these means would be increased by the increased quantity of conveniences and necessaries. If less labour could be commanded it would only be because labour rose as compared with necessaries, a reason why profits should fall, and3 capital be less rapidly accumulated, but low profits would only exist while labour continued high. Increase population and sink the value of labour as compared with necessaries, and profits would again be high and afford an inducement to new accumulations. I must repeat here what I have often said elsewhere that capital4 and labour could not both be abundant5 at the same time, for the one will always purchase the other, however they may be multiplied.
To say that I have a very abundant capital is to say that I have a great demand for labour. To say that there is a great abundance of labour, is to say that there is not an adequate capital to employ it.
In the formation of the value of the whole produce of a country, a part depends upon price, and a part upon quantity1If price be estimated in a medium unvarying in value, price and value mean the same thing, and then I understand the proposition to be this. Either the whole quantity of produce may have increased, each particular thing remaining at the same price; or the quantity may not have increased and each individual thing may be at a higher price. The whole price of 150 qrs. of wheat, may be greater than the whole price of 100 qrs. yet each individual quarter may be of the same value as before or the 100 qrs. may be of equal value with that which 150 qrs. bore before, because each individual quarter may have risen in value. The increase in the price of each individual quarter, in an unvarying medium, must be owing, if it have any duration, to an increased cost of production; but the increase in the price of the larger quantity, is compatible with a diminished cost of production.
Mr. Malthus says that “an increase of price, with little or no increase of quantity, must be followed very soon by a nearly proportionate increase of wages.” I should very much doubt if the increase of wages would be proportionate to the rise in the price of corn, for if corn can only rise in an unvarying medium on account of an increased cost of production, more labour must be bestowed to obtain the same quantity.
With more labour, there will be more labourers, and if more labourers only get the same quantity of corn, less of course will be the portion of each individual labourer, and therefore labour cannot rise in the same proportion as corn. I agree with Mr. Malthus “that the command of the labourer over the necessaries of life would go on diminishing, and the population must come to a stop” and therefore I cannot agree with him that the labourers wages would increase proportionably with the price of corn—if they did—population never could come to a stop. If the rise in the whole value of produce is owing to the increased quantity, then indeed wages would probably rise, because there would be an increased demand for labour.
As money wages would rise, and the commodities on which wages were expended would not rise, the labourer would command an additional quantity of commodities, and the population instead of coming to a stop would go on increasing; and another rise of prices, under the same circumstances, would occasion a further effective demand for labour.
This is on the supposition always that money in which price is estimated is at the time of an unvarying value; but if this be not a condition of the proposition, if Mr. Malthus means that the value of the whole produce increases in a money of varying value, I do not know how to deal with him, for1 we may suppose the medium itself to become more valuable, or less valuable. In such a medium an increase of price may take place with the same2 , with a larger, or with a smaller quantity of produce. Quantity and price may both rise, or both fall.3 Each individual thing may rise or fall and may be followed by a rise or fall of wages. It is impossible to deny any proposition which may be advanced respecting price, unless it be previously determined whether the person advancing it regards money at the time as stationary, or variable in value, and if variable in what degree and in what direction.
On the other handBy increasing the quantity of commodities, they may not be able to command so much labour as before. This I understand, because in proportion as commodities are low as compared with labour, labour is high as compared with commodities. Labour then is in great demand, it is paid for at a high value, and the labourer has an abundance of enjoyments:—there are plenty of commodities, and he has a large share of them: no such thing says Mr. Malthus “for a time there will be no demand for workmen.” How are these propositions to be reconciled?
But if he is able to command this additionalEvery thing in this argument must depend on the cause of the fall of the price of wheat. Is the cause temporary, or permanent? Is it occasioned by facility of production, or by temporary glut? Has money risen in value as compared with corn, and other things, or has the rise in the money price of corn been confined to corn only? Accordingly as the fall might be owing to one or other of these causes, would the effects be different.
I do not understand how the demand for labour may be stationary, if not retrograde, without any alteration in its price.
The current price of labour is the best criterion we can possess of the condition of the labourer and his family. What can prevent competition from acting on the price when the demand slackens or the supply increases?
It is obvious thereforeThis conclusion is not made out, at least, to my satisfaction.
I have said nothing of the value of labour &c.Mr. Malthus thinks that what1 he calls nominal and real wages of labour include every thing which relates to the condition of the labourer, and the encouragement to population. But according to my view of the subject, he says, nothing can be inferred on these points. Does my view prevent an examination into the real condition of the labourer? It is true that I say the labourers wages are high if he receives a high value for his work, that is to say if he receive the produce of a great deal of labour. To know his real condition we must still enquire what this produce is in quantity, the very enquiry made by Mr. Malthus. Because I give different names to Mr. Malthus nominal, and real price, he thinks there is a real difference between us—in this case I think there is none. I should first enquire what the labourers money wages were, and should estimate his1 condition by the abundance of necessaries which those money wages would procure him.
The difficulty or facility of production
p. 295.The varying relationThese two causes may both be classed under the name of high or low wages. Profits in fact depend on high or low wages, and on nothing else.
The greater the proportion of the value of the whole produce necessary to support the labourer, the higher will be wages.
The greater the quantity of capital is, compared with the labour which it is to employ, the higher will wages be.
In all this Mr. Malthus and I appear to concur. Whenever the difficulty of production on the land is such that a greater proportion of the value of the whole produce is employed in supporting labour, I call wages high, for I measure value by these proportions; and from Mr. Malthus language here, everybody would think he agreed with me, yet in page 291 he says “I have said nothing of the criterion assumed by Mr. Ricardo, that is, by the labour which has been expended in procuring the earnings of the labourer, or the cost in labour of the labourers wages.”1 In what does this differ from Mr. Malthus’ criterion? One hundred quarters of corn are produced on the last land taken into cultivation, and with so much increased difficulty,2 that the labourers portion of these 100 quarters is 65 quarters. On the land which before that was cultivated, as the last, 110 quarters were produced with the same quantity of labour and the labourers then3 obtained 70 quarters for their share. The portion now paid to the labourers is less, but the proportion of the whole produce obtained by their labour is greater, for they before had 63 p.c. now they have 65, and as the 100 qrs. will now rise to the same value that 110 qrs. were of before, by having a larger proportion of the quantity produced, they will also have a larger value, and that value will be the produce of a greater quantity of labour than the smaller value was of before. I contend then that a greater proportion and a greater value mean the same thing. I allow Mr. Malthus to chuse any medium he pleases for measuring value except raw produce itself whose value is to be measured, and he will find my proposition true. Of course the measure itself must not have varied in value between the two periods of comparison.
In this case &c.I quite agree with Mr. Malthus in this explanation of profits.
But a moment’s consideration &c.And yet the value of labour is Mr. Malthus standard measure of real value in exchange. See the following paragraphs.
The cost of producing corn &c. &c.I agree throughout this section with Mr. Malthus in principle, we only differ in our ideas of what constitutes a real1 measure of value.
A second circumstance &c.All these circumstances come under the general cause already noticed, namely the “proportion of the produce that is given to the labourer.”1 The circumstances here enumerated undoubtedly affect wages, and therefore affect profits.
A day’s labour of a Hindoo or a South American it is admitted cannot be compared with that of an Englishman— was it fair then in Mr. Malthus to suppose that when I was talking of the quantity of labour regulating price and profits I considered it as of no importance whether it was the labour for a given time of a Hindoo, an Irishman, or an Englishman. I apply my doctrine to the same country only, and fix on a standard which is common in that country. I should not estimate profits in England, by the labour of a Hindoo; nor in India by the labour of an Englishman,—unless I had the means of reducing them to one common standard.
But it was stated at the beginning ofMr. Malthus use of the word cost is throughout this work very ambiguous. In the cost of a commodity does he include or exclude the profits of stock. Here he evidently excludes it.
I will therefore only add hereI do not understand what is meant by the prices of corn and labour rising and terminating in an altered value of money. The price of corn may rise on account of increased difficulty of producing it—this will raise corn relatively to other things, but money will continue unaltered in value. The price of corn may rise because money falls in value, every thing else will then rise, and no effect will be produced on real2 wages and profits, the rise will be altogether nominal.
The rise of corn and labour at homeIf it be a real rise of corn and labour, and not a fall in the value of money, it will not raise the price of foreign products. But how will it affect the price of home products? it will raise some, and lower others, according as more or less fixed capital may be employed on their production. See Page 1 What Mr. Malthus says in this paragraph is shortly this “profits will not fall so much as might be expected from a rise of corn, because the labourers wages, though they will rise, will be kept from rising much2 by the comparatively cheaper price of the other necessaries which he consumes.[”] This can not nor has not been disputed.
From the accession of Geo. 2Nobody can deny that improvements in Agriculture, and in the application of labour to the land, have the same effect in raising profits, as an increase of fertility in the land.
The different rates of interest &c. &c.This is disingenuous. Who has advanced a [“]theory of profits founded on the natural quality of the last land taken into cultivation.” The theory is that profits depend on the productiveness of the last land taken into cultivation, whether that productiveness be owing to the natural quality of the land, or the economy and skill with which labour may be applied to it. Profits are increased, either by diminishing the quantity of labour bestowed on the last land which yields a given produce, or by increasing the produce with a given quantity of labour. Mr. Malthus will I am sure not say that I have ever denied this principle—he will not say that I have not distinctly advanced it.
The nature of these factsWhat does Mr. Malthus mean by relative redundancy of capital? I do not like the term; but waiving that objection, under every increase of capital, if population increases still faster, and labour falls, population is redundant as compared with capital; and if population increases at a slower rate, than capital, capital is relatively redundant to population. This is again another way of stating that profits will be high or low, according as wages are low or high.
Allowing, however, even a stationaryWhatever Mr. Malthus may call it this is a high price of labour, because by his own shewing it is an increased proportion of the produce obtained from the last land which is awarded to the labourer.1 He is particularly bound to call such wages high, because he measures value by quantity, and he tells us the labourer will have an increased quantity of corn, which he calls increased real wages. Profits then fall because wages rise—circumstances have made the position of the labourer favorable to him. Labour is undersupplied compared with capital2 . If money wages were higher than before, that would account for a fall in mercantile profits. If they were no higher, money could not be of the same value—it must have risen3 and the prices of goods have fallen.
These two causes of productiveness in the powers of labour were evidently encouraged and in a manner called into action by the circumstances of the times, that is by the high price of cornMoney, and money unvarying in value, is uniformly referred to by Mr. Malthus, altho’ he before so pointedly rejected it as a measure of value. If money prices were as Mr. Malthus calls them always1 nominal prices, and very different from real prices, high money prices2 would not afford any encouragement to the increased production of a particular commodity3 . It is only high real value which affords any such encouragement. I wish Mr. Malthus had kept4 to his own standard, and5 explained the principles of political Economy by a reference to it. If corn rises from £4—to £5 pr. quarter he calls it a rise in the price of corn, if labour rises from 10 to 12/- pr. week he speaks of the rise in the price of labour, but he sometimes calls the same thing a fall in the real6 value of labour. True he would say the labourer gets more money but for that money he gets less corn. How am I to know when he talks of the high price of labour whether he means a high or a low real value?
The third causeNow this is one of the occasions where it appears to me that Mr. Malthus comes to a wrong conclusion by mixing the two measures of value—corn value—and money price.
He supposes that corn rises relatively to other commodities, and that wages rise relatively to other commodities, but fall in corn, and he concludes that profits will rise.
First how can the manufacturers profit rise? Wages in commodities are higher than before, the manufacturer therefore retains a smaller quantity of manufactured goods for himself after paying the remainder for wages. The relative value of manufactured goods have not altered, therefore with his diminished quantity of goods he can obtain only a diminished quantity of all other manufacturers goods. But the relative value of manufactured goods are lower compared with corn. If he had the same quantity of goods as before he could obtain less corn for them, having a less quantity of those goods this less quantity of corn will still be reduced lower. His profits then estimated in goods or in corn are lower than before.7 Why does the relative value of corn rise? because it is more difficult to produce it, or the demand has increased compared with the supply. The demand can not have increased, because the labourers by the supposition consume less. The supply may have diminished from a bad season, the farmer’s profits are then accidental and temporary, and are besides counteracted by his obtaining the increased price for a smaller quantity. The only permanent cause then is increased cost of production. On the land last cultivated, less will be obtained, and notwithstanding the reduction in the quantity given to the labourer, it will be a larger proportion of the whole. The whole quantity obtained by the farmer may and will1 be of no greater value in manufactured commodities than before—out of that equal2 value, he is to pay a larger proportion, and therefore a larger value3 estimated also, if you please, in manufactured goods, to the labourers; how then can his profits have risen? they will fall to the level of the manufacturers profits. On the better lands rents will rise, which will occasion a like fall in the profits of the cultivators of such lands.
At the same time it must be allowedUnder a system of free importation, there would be a sufficient demand for corn of home growth, to encourage4 improvements in Agriculture.
183p. 324. Mr. speaks of a rising price of corn owing to an increase of wealth. If this is not occasioned by an increased cost of production, why should it operate on corn more than on other things. If it did not, either corn would not rise, or there would be a proportionate rise of other commodities, and then the whole might be referred to a fall in the value of money—which produces no effects on profits.
I should feel no doubt &c.What a number of conditions ! the only one of importance is the abundance or scarcity of capital compared with the demand for it, which is saying in other words that if in the beginning of the twentieth century the comparative quantity of capital and labour should be such that the labourers should not be able to command so large a1 proportion of the produce obtained on the last land profits will then be higher. On these conditions there is no denying the conclusion. Whether they will be so or not must depend on improvements in Agriculture—or on the permission by law to import corn2 without restrictions from other countries.
And consequently to dwell onAn unfounded charge—see P. 3
According to Mr. Ricardo &c. &c.This account of my opinion differs greatly from that given by Mr. Malthus Page 309,—but in what he now says he is not quite correct. I do not say that profits are regulated by wages, and wages by the quality of the last land taken into cultivation without any regard to its productiveness, for it is expressly the productiveness of that land which regulates profits if wages be supposed of a fixed value.4
Let us suppose a prosperous commercial city &c. &c.In all the remarks preceding this passage Mr. Malthus has clearly shewn that no medium that can be chosen is or can under any circumstances be even1 supposed to be an accurate measure of value. I not only admit this but have myself pointed it out.2 To whatever corrections must be made for this irremediable imperfection in the most perfect measure3 of value that can be conceived, I have no objections to offer. It may affect some commodities one way, some the contrary way, the general average however will not be much affected. The general principle is not in the slightest degree invalidated by the necessary imperfection of the measure. I maintain no other doctrine than that which has been well explained by Mr. Malthus in the 2 first sections of 5th Chapter. His own statements are sometimes at variance with it, mine I believe never.
I have now however to do with the passage at the head of this remark.
Instead of supposing that all the corn this prosperous and commercial city required4 was imported let us suppose that three fourths of that quantity was imported, and that no land remained in cultivation but such as afforded so abundant a supply that the farmer could afford to sell it at the low price of importation5 and obtain the current rate of profits. Mr. Malthus would probably then agree with me that profits could not fall whilst we could import corn at the same price because till it rose no worse land could be cultivated. If poorer land were cultivated the quantity of produce on that land6 would not bear the same proportion to the labour employed as before, and therefore either corn must rise or commodities must fall to preserve the equilibrium of profits. If poorer land were cultivated I should say that the natural value7 of corn had risen, at whatever value in money it might be rated. If it did not rise in price but commodities fell in price I should think that money had risen in value. Now this rise in the value of money is either common to all countries or particular to this. If common to all countries while the price of corn was stationary in this country it would fall in other countries—if it rose in this country it would remain stationary in other countries. The real cause of the variation here is that more labour was required to produce the last portions wanted—no such cause operated abroad and therefore corn would be exported from abroad to this country till the relative prices were restored to the same state at which they were before the worse land had been taken into cultivation.
Now suppose our demand to increase—to double if you please—the question is can foreign countries supply this additional quantity without taking new land into cultivation. If they can I can see no reason for the rise in the price of their corn, if they cannot it will rise and the result will be a fall of profits in both countries. Now while corn remained at the low price in England commodities could not fall8 for the reason already given that if they did agricultural profits would differ from manufacturing profits and capital would move from one to the other. But the demand for foreign corn may be so great that the foreign country may not be able or willing to supply it—they may refuse to accept of any more of the commodities which alone we can ultimately offer in exchange for them. England however wants the corn and therefore she must consent to export her money for corn. This accumulation of money will raise the price of corn in the foreign country but it will not in the same degree raise the price of English goods and therefore the relation between corn and commodities in the foreign country being no longer the same as before England would have less inducement to buy corn of her.
The exportation of money in England would operate in a reverse order it would lower both1 the value of corn and commodities. Importation then of corn and exportation of commodities would both be checked for they would be more nearly of a value in both countries. If the wants of England for corn were great she would either consent to import it on the new terms, or she would grow it herself; in either case her profits would fall, for if the same or even a less quantity of corn were given to the labourer it would still be a larger proportion of the quantity obtained by a given quantity of labour.
Now these effects are brought about by the limited demand of the foreign country for the commodities which we could give in exchange for corn. Our demand for their corn was not so limited, and in consequence they become possessed of something like a monopoly against us. Profits in all countries must mainly depend upon the quantity of labour given for corn, either when grown on their own land, or embodied in manufactures and2 with them bought from other countries. I say mainly depend, because I think wages mainly depend on the price of corn. After the observations of Mr. Malthus on the other causes which may affect labour, I must guard myself against being supposed to deny the effect of those other causes on wages.
The case then put by Mr. Malthus only confirms the general doctrine, it appears clear that what he calls a fall in the price of manufactured goods is in reality an increased labour price of food. I acknowledge the results but I think I have given the fair solution of them.
What is it, I would ask is to &c.I answer the cost of production in the foreign country. If England gives this year to Portugal the same quantity of hardware for wine which she gave last year, she will have an increased profit on that trade if the hardware cost her a great deal less labour and the labourer be3 not more amply remunerated that produces it.
But if they are determined &c.Because you cannot reduce the profits on agriculture. If corn and labour be at a low real1 price the profits on agriculture must be high, and so must also be the profits on all other capitals—for as Mr. Malthus observes Page 296 “Profits in the same country tend to an equality.” See2
If the price of cornThat is to say we should not have imported our corn cheap, for by cheapness I mean a cheap price relatively to the commodities exported. If this be true, we should have preferred growing corn, and profits in that case would be just where they are.
Mr. Ricardo has notOnce more I must say that I lay the very greatest stress upon the influence of permanent improvements in Agriculture. The passage quoted refers to a state of things when no improvements are taking place, and therefore the argument built upon it which supposes improvements has no foundation.
And the fall would probably be occasioned, not by a rise in the bullion price of corn in the Ports of Europe, but by a fall in the bullion prices of the exports with which the corn was purchased by the country in question.The question is one of trifling importance, but I have little doubt that it would be occasioned by a rise in the bullion price of corn, if it happened1 at all. A variation in the value of money is of consequence to individuals, but is insignificant in its effects on the interests of a nation.
It must be allowed then &c. &c. 2
Wealth, however, it will be allowed, does not always increase in proportion to the increase of value; because an increase of value may sometimes take place under an actual diminution of the necessaries, conveniences, and luxuries of life.This is my opinion but it is absolutely inconsistent with Mr. Malthus’s theory. In page 60 he says “What we want further is some estimate of a kind which may be denominated real value in exchange implying the quantity of the necessaries and conveniences of life which those wages, incomes or commodities will enable the possessor of them to command.[”]
In the one passage we are told that value is in proportion to the abundance of1 necessaries and conveniences in the other we are assured that an increase of value may take place under an actual diminution of necessaries and conveniences.
Mr. Ricardo saysI have allowed that their market prices may differ, but I say commodities so situated will have the same natural price, and will therefore have a constant tendency to agree in market value also; for natural price is the great regulator of market price.
On the Immediate Causes of the Progress of Wealth
Statement of the particular Object of Inquiry
[The particular object of inquiry is to trace the causes which are most effective in calling forth the powers of production in different countries.
Moral and political causes are, in this respect, of primary importance; but it is intended chiefly to consider those which are more directly within the province of political economy.
Many countries, with great powers of production, are poor, and many, with scanty powers of production, are comparatively rich, without any very essential difference in the security of property.
If the actual wealth of a country be not, after a certain period, in some degree proportioned to its powers of production, there must have been a want of stimulus to produce; and the practical question for consideration is, what is the most immediate and effective stimulus to the progress of wealth.]
Of an Increase of Population considered as a Stimulus to the continued Increase of Wealth
[If want alone, or the desire of the necessaries of life among the labouring classes, were a sufficient stimulus to production, the earth would have been comparatively full of inhabitants.
A man whose only possession is his labour can make no effectual demand for produce if his labour be not wanted.
To justify the employment of capital, there must be a demand for the produce of it, beyond that which may be created by the demand of the workmen employed.
The effect of the increase of population to raise profits by lowering wages must be very limited, and must soon be checked by want of demand.
By a reference to experience, it will be found that those states often make the slowest progress in wealth where the stimulus arising from population alone is the greatest.
The practical question is, whether the pressure of the population hard against the limits of subsistence is an adequate stimulus to the increase of wealth? And the state of most countries of the world determines the question in the negative.]
Of Accumulation, or the Saving from Revenue to add to Capital, considered as a Stimulus to the Increase of Wealth
Those who reject mere population as an adequate stimulus to the increase of wealth, are generally disposed to make every thing depend upon accumulation. It is certainly true that no permanent and continued increase of wealth can take place without a continued increase of capital; and I cannot agree with Lord Lauderdale in thinking that this increase can be effected in any other way than by | saving from the stock which might have been destined for immediate consumption, and adding it to that which is to yield a profit; or in other words, by the conversion of revenue into capital.*
But we have yet to inquire what is the state of things which generally disposes a nation to accumulate; and further, what is the state of things which tends to make that accumulation the most effective, and lead to a further and continued increase of capital and wealth.
It is undoubtedly possible by parsimony to devote at once a much larger share than usual of the produce of any country to the maintenance of productive labour; and it is quite true that the labourers so employed are consumers as well as unproductive labourers; and as far as the labourers are concerned, there would be no diminution of consumption or demand. But it has already been shewn that the consumption and demand occasioned by the persons employed in productive labour can never alone furnish a motive to the accumulation and employment of capital; and with regard to the capitalists themselves, together with the landlords and other rich persons, they have, by the supposition, agreed to be parsimonious, and by depriving themselves of their usual | conveniences and luxuries to save from their revenue and add to their capital. Under these circumstances, I would ask, how it is possible to suppose that the increased quantity of commodities, obtained by the increased number of productive labourers, should find purchasers, without such a fall of price as would probably sink their value below the costs of production, or, at least, very greatly diminish both the power and the will to save.(196)
It has been thought by some very able writers, that although there may easily be a glut of particular commodities, there cannot possibly be a glut of commodities in general; because, according to their view of the subject, commodities being always exchanged for commodities, one half will furnish a market for the other half, and production being thus the sole source of demand, an excess in the supply of one article merely proves a deficiency in the supply of some other, and a general excess is impossible. M. Say, in his distinguished work on political economy, has indeed gone so far as to state that the consumption of a commodity by taking it out of the market diminishes demand, and the production of a commodity proportionably increases it.
This doctrine, however, to the extent in which it has been applied, appears to me to be utterly unfounded, and completely to contradict the great principles which regulate supply and demand.
It is by no means true, as a matter of fact, | that commodities are always exchanged for commodities. The great mass of commodities is exchanged directly for labour, either productive or unproductive; and it is quite obvious that this mass of commodities, compared with the labour with which it is to be exchanged, may fall in value from a glut just as any one commodity falls in value from an excess of supply, compared either with labour or money.(197)
In the case supposed there would evidently be an unusual quantity of commodities of all kinds in the market, owing to the unproductive labourers of the country having been converted, by the accumulation of capital, into productive labourers; while the number of labourers altogether being the same, and the power and will to purchase for consumption among landlords and capitalists being by supposition diminished, commodities would necessarily fall in value, compared with labour, so as to lower profits almost to nothing, and to check for a time further production.(198) But this is precisely what is meant by the term glut, which, in this case, is evidently general not partial.
M. Say, Mr. Mill,* and Mr. Ricardo, the prin-|cipal authors of the new doctrines on profits, appear to me to have fallen into some fundamental errors in the view which they have taken of this subject.
In the first place, they have considered commodities as if they were so many mathematical figures, or arithmetical characters, the relations of which were to be compared, instead of articles of consumption, which must of course be referred to the numbers and wants of the consumers.
If commodities were only to be compared and exchanged with each other, then indeed it would be true that, if they were all increased in their proper proportions to any extent, they would continue to bear among themselves the same relative value; but, if we compare them, as we certainly ought to do, with the numbers and wants of the consumers, then a great increase of produce with comparatively stationary numbers and with wants diminished by parsimony, must necessarily occasion a great fall of value estimated in labour, so that the same produce, though it might have cost the same quantity of labour as before, would no longer command the same quantity; and both the power of accumulation and the motive to accumulate would be strongly checked.(199)
It is asserted that effectual demand is nothing more than the offering of one commodity in exchange for another. But is this all that is necessary to effectual demand? Though each commodity may have cost the same quantity of labour and capital in its production, and they may be | exactly equivalent to each other in exchange, yet why may not both be so plentiful as not to command more labour, or but very little more than they have cost; and in this case, would the demand for them be effectual? Would it be such as to encourage their continued production? Unquestionably not. Their relation to each other may not have changed; but their relation to the wants of the society, their relation to bullion, and their relation to domestic and foreign labour, may have experienced a most important change.(200)
It will be readily allowed that a new commodity thrown into the market, which, in proportion to the labour employed upon it, is of higher exchangeable value than usual, is precisely calculated to increase demand; because it implies, not a mere increase of quantity, but a better adaptation of the produce to the tastes, wants and consumption of the society. But to fabricate or procure commodities of this kind is the grand difficulty; and they certainly do not naturally and necessarily follow an accumulation of capital and increase of commodities, most particularly when such accumulation and increase have been occasioned by economy of consumption, or a discouragement to the indulgence of those tastes and wants, which are the very elements of demand.(201)
Mr. Ricardo, though he maintains as a general position that capital cannot be redundant, is obliged to make the following concession. He says, “There is only one case, and that will be temporary, in which the accumulation of capital with a | low price of food may be attended with a fall of profits; and that is, when the funds for the maintenance of labour increase much more rapidly than population;—wages will then be high and profits low. If every man were to forego the use of luxuries and be intent only on accumulation, a quantity of necessaries might be produced for which there could not be any immediate consumption. Of commodities so limited in number, there might undoubtedly be an universal glut; and consequently there might neither be demand for an additional quantity of such commodities, nor profits on the employment of more capital. If men ceased to consume, they would cease to produce.” Mr. Ricardo then adds, “This admission does not impugn the general principle.”* In this remark I cannot quite agree with him.(202) As, from the nature of population, an increase of labourers cannot be brought into the market, in consequence of a particular demand, till after the lapse of sixteen or eighteen years, and the conversion of revenue into capital may take place much more rapidly; a country is always liable to an increase of the funds for the maintenance of labour faster than the increase of population. But if, whenever this occurs, there may be a universal glut of commodities, how can it be maintained, as a general position, that capital is never redundant; and that because commodities may retain the same relative values, a glut can only be partial, not general? |
Another fundamental error into which the writers abovementioned and their followers appear to have fallen is, the not taking into consideration the influence of so general and important a principle in human nature, as indolence or the love of ease.
It has been supposed† that, if a certain number of farmers and a certain number of manufacturers had been exchanging their surplus food and clothing with each other, and their powers of production were suddenly so increased that both parties could, with the same labour, produce luxuries in addition to what they had before obtained, there could be no sort of difficulty with regard to demand, as part of the luxuries which the farmer produced would be exchanged against part of the luxuries produced by the manufacturer; and the only result would be, the happy one of both parties being better supplied and having more enjoyments.
But in this intercourse of mutual gratifications, two things are taken for granted, which are the very points in dispute. It is taken for granted that luxuries are always preferred to indolence, and that the profits of each party are consumed as revenue. What would be the effect of a desire to save under such circumstances, shall be considered presently. The effect of a preference of indolence to luxuries would evidently be to occasion a want of demand for the returns of the increased powers of production supposed, and to throw labourers out | of employment.(203) The cultivator, being now enabled to obtain the necessaries and conveniences to which he had been accustomed, with less toil and trouble, and his tastes for ribands, lace and velvet not being fully formed, might be very likely to indulge himself in indolence, and employ less labour on the land; while the manufacturer, finding his velvets rather heavy of sale, would be led to discontinue their manufacture, and to fall almost necessarily into the same indolent system as the farmer. That an efficient taste for luxuries, that is, such a taste as will properly stimulate industry, instead of being ready to appear at the moment it is required, is a plant of slow growth, the history of human society sufficiently shews; and that it is a most important error to take for granted, that mankind will produce and consume all that they have the power to produce and consume, and will never prefer indolence to the rewards of industry, will sufficiently appear from a slight review of some of the nations with which we are acquainted. But I shall have occasion for a review of this kind in the next section; and to this I refer the reader.
A third very serious error of the writers above referred to, and practically the most important of the three, consists in supposing that accumulation ensures demand; or that the consumption of the labourers employed by those whose object is to save, will create such an effectual demand for commodities as to encourage a continued increase of produce.
Mr. Ricardo observes, that “If 10,000l. were | given to a man having 100,000l. per annum, he would not lock it up in a chest, but would either increase his expenses by 10,000l., employ it himself productively, or lend it to some other person for that purpose; in either case demand would be increased, although it would be for different objects. If he increased his expenses, his effectual demand might probably be for buildings, furniture, or some such enjoyment. If he employed his 10,000l. productively, his effectual demand would be for food, clothing, and raw materials, which might set new labourers to work. But still it would be demand.”*
Upon this principle it is supposed that if the richer portion of society were to forego their accustomed conveniences and luxuries with a view to accumulation, the only effect would be a direction of nearly the whole capital of the country to the production of necessaries, which would lead to a great increase of cultivation and population. But, without supposing an entire change in the usual motives to accumulation, this could not possibly happen. The usual motives for accumulation are, I conceive, either the future wealth and enjoyment of the individual who accumulates, or of those to whom he means to leave his property. And with these motives it could never answer to the possessor of land to employ nearly all the labour which the soil could support in cultivation; as by so doing he would necessarily destroy his neat rent, and render it impossible for him, without subsequently dismissing the greatest part of his workmen and | occasioning the most dreadful distress, either to give himself the means of greater enjoyment at a future distant period, or to transmit such means to his posterit.(204)
The very definition of fertile land is, land that will support a much greater number of persons than are necessary to cultivate it; and if the landlord, instead of spending this surplus in conveniences, luxuries and unproductive consumers, were to employ it in setting to work on the land as many labourers as his savings could support, it is quite obvious that, instead of being enriched, he would be impoverished by such a proceeding, both at first and in future. Nothing could justify such a conduct but a different motive for accumulation; that is, a desire to increase the population—not the love of wealth and enjoyment; and till such a change takes place in the passions and propensities of mankind, we may be quite sure that the landlords and cultivators will not go on employing labourers in this way.(205)
What then would happen? As soon as the landlords and cultivators found that they could not realize their increasing produce in some way which would give them a command of wealth in future, they would cease to employ more labour upon the land;* and if the business of that part of the so-|ciety which was not engaged in raising raw produce, consisted merely in preparing the other simple necessaries of life, the number required for this purpose being inconsiderable, the rest of those whom the soil could support would be thrown out of work. Having no means of legally demanding a portion of the raw produce, however plentiful it might be at first, they would gradually decrease in numbers; and the failure of effective demand for the produce of the soil would necessarily diminish cultivation, and throw a still greater number of persons out of employment. This action and reaction would thus go on till the balance of produce and consumption was restored in reference to the new tastes and habits which were established; and it is obvious that without an expenditure which will encourage commerce, manufactures, and unproductive consumers, or an Agrarian law calculated to change the usual motives for accumulation, the possessors of land would have no sufficient | stimulus to cultivate well; and a country such as our own, which had been rich and populous, would, with such parsimonious habits, infallibly become poor, and comparatively unpeopled.(206)
The same kind of reasoning will obviously apply to the case noticed before. While the farmers were disposed to consume the luxuries produced by the manufacturers, and the manufacturers those produced by the farmers, all would go on smoothly; but if either one or both of the parties were disposed to save with a view of bettering their condition, and providing for their families in future, the state of things would be very different. The farmer, instead of indulging himself in ribands, lace, and velvets,* would be disposed to be satisfied with more simple clothing, but by this economy he would disable the manufacturer from purchasing the same amount of his produce;(207) and for the returns of so much labour employed upon the land, and all greatly increased in productive power, there would evidently be no market. The manufacturer, in like manner, instead of indulging himself in sugar, grapes and tobacco, might be disposed to save with a view to the future, but would be totally unable to do so, owing to the parsimony of the farmers and the want of demand for manufactures.† |
An accumulation, to a certain extent, of common food and common clothing might take place on both sides; but the amount must necessarily be extremely confined. It would be of no sort of use to the farmer to go on cultivating his land with a view merely to give food and clothing to his labourers. He would be doing nothing either for himself or family, if he neither consumed the surplus of what they produced himself, nor could realize it in a shape that might be transmitted to his descendants. If he were a tenant, such additional care and labour would be entirely thrown away; and if he were a landlord, and were determined, without reference to markets, to cultivate his estate in such a way as to make it yield the greatest neat surplus with a view to the future, it is quite certain that the large portion of this surplus which was not required either for his own consumption, or to purchase clothing for himself and his labourers, would be absolutely wasted. If he did not choose to use it in the purchase of luxuries or the maintenance of unproductive labourers, it might as well be thrown into the sea. To save | it, that is to use it in employing more labourers upon the land would, as I said before, be to impoverish both himself and his family.
It would be still more useless to the manufacturers to go on producing clothing beyond what was wanted by the agriculturists and themselves. Their numbers indeed would entirely depend upon the demands of the agriculturists, as they would have no means of purchasing subsistence, but in proportion as there was a reciprocal want of their manufactures. The population required to provide simple clothing for such a society with the assistance of good machinery would be inconsiderable, and would absorb but a small portion of the proper surplus of rich and well cultivated land. There would evidently therefore be a general want of demand, both for produce and population;(208) and while it is quite certain that an adequate passion for consumption may fully keep up the proper proportion between supply and demand, whatever may be the powers of production, it appears to be quite as certain that a passion for accumulation must inevitably lead to a supply of commodities beyond what the structure and habits of such a society will permit to be consumed.†
But if this be so, surely it is a most important error to couple the passion for expenditure and | the passion for accumulation together, as if they were of the same nature; and to consider the demand for the food and clothing of the labourer, who is to be employed productively, as securing such a general demand for commodities and such a rate of profits for the capital employed in producing them, as will adequately call forth the powers of the soil, and the ingenuity of man in procuring the greatest quantity both of raw and manufactured produce.
Perhaps it may be asked by those who have adopted Mr. Ricardo’s view of profits,—what becomes of the division of that which is produced, when population is checked merely by want of demand? It is acknowledged that the powers of production have not begun to fail; yet, if labour produces largely and yet is ill paid, it will be said that profits must be high.
I have already stated in a former chapter, that the value of the materials of capital very frequently do not fall in proportion to the fall in the value of the produce of capital, and this alone will often account for low profits. But independently of this consideration, it is obvious that in the production of any other commodities than necessaries, the theory is perfectly simple. From want of demand, such commodities may be very low in price, and a large portion of the whole value produced may go to the labourer, although in necessaries he may be ill paid, and his wages, both with regard to the quantity of food which he receives and the labour required to produce it, may be decidedly low.(209) |
If it be said, that on account of the large portion of the value of manufactured produce which on this supposition is absorbed by wages, it may be affirmed that the cause of the fall of profits is high wages, I should certainly protest against so manifest an abuse of words. The only justifiable ground for adopting a new term, or using an old one in a new sense, is, to convey more precise information to the reader; but to refer to high wages in this case, instead of to a fall of commodities, would be to proceed as if the specific intention of the writer were to keep his reader as much as possible in the dark as to the real state of things.(210)
In the production of necessaries however, it will be allowed, that the answer to the question is not quite so simple, yet still it may be made sufficiently clear. Mr. Ricardo acknowledges that there may be a limit to the employment of capital upon the land from the limited wants of society, independently of the exhaustion of the soil. In the case supposed, this limit must necessarily be very narrow, because there would be comparatively no population besides the agriculturists to make an effective demand for produce. Under such circumstances corn might be produced, which would lose the character and quality of wealth;(211) and, as I before observed in a note, all the parts of the same produce would not be of the same value. The actual labourers employed might be tolerably well fed, as is frequently the case, practically, in those countries where the labourers are fed by the far-|mers,* but there would be little work or food for their grown up sons; and from varying markets and varying crops, the profits of the farmer might be the lowest at the very time when, according to the division of the produce, it ought to be the highest, that is, when there was the greatest proportionate excess of produce above what was paid to the labourer. The wages of the labourer cannot sink below a certain point, but a part of the produce, from excess of supply, may for a time be absolutely useless, and permanently it may so fall from competition as to yield only the lowest profits.
I would observe further, that if in consequence of a diminished demand for corn, the cultivators were to withdraw their capitals so as better to proportion their supplies to the quantity that could be properly paid for; yet if they could not employ the capital they had withdrawn in any other way, which, according to the preceding supposition, they could not, it is certain that, though they might for a time make fair profits of the small | stock which they still continued to employ in agriculture, the consequences to them as cultivators would be, to all intents and purposes, the same as if a general fall had taken place on all their capital.(212)
If, in the process of saving, all that was lost by the capitalist was gained by the labourer, the check to the progress of wealth would be but temporary, as stated by Mr. Ricardo; and the consequences need not be apprehended. But if the conversion of revenue into capital pushed beyond a certain point must, by diminishing the effectual demand for produce, throw the labouring classes out of employment, it is obvious that the adoption of parsimonious habits in too great a degree may be accompanied by the most distressing effects at first, and by a marked depression of wealth and population permanently.(213)
It is not, of course, meant to be stated that parsimony, or even a temporary diminution of consumption,* is not often in the highest degree useful, and sometimes absolutely necessary to the progress of wealth. A state may certainly be ruined by extravagance; and a diminution of the actual expenditure may not only be necessary on this account, but when the capital of a country is deficient, compared with the demand for its products, a temporary economy of consumption is required, in order to provide that supply of capital | which can alone furnish the means of an increased consumption in future. All that I mean to say is, that no nation can possibly grow rich by an accumulation of capital, arising from a permanent diminution of consumption;(215) because, such accumulation being greatly beyond what is wanted, in order to supply the effective demand for produce, a part of it would very soon lose both its use and its value, and cease to possess the character of wealth.
On the supposition indeed of a given consumption, the accumulation of capital beyond a certain point must appear at once to be perfectly futile. But, even taking into consideration the increased consumption likely to arise among the labouring classes from the abundance and cheapness of commodities, yet as this cheapness must be at the expense of profits, it is obvious that the limits to such an increase of capital from parsimony, as shall not be attended by a very rapid diminution of the motive to accumulate, are very narrow, and may very easily be passed.
The laws which regulate the rate of profits and the progress of capital, bear a very striking and singular resemblance to the laws which regulate the rate of wages and the progress of population.
Mr. Ricardo has very clearly shewn that the rate of profits must diminish, and the progress of accumulation be finally stopped, under the most favourable circumstances, by the increasing difficulty of procuring the food of the labourer. I, in like manner, endeavoured to shew in my | Essay on the Principle of Population that, under circumstances the most favourable to cultivation which could possibly be supposed to operate in the actual state of the earth, the wages of the labourer would become more scanty, and the progress of population be finally stopped by the increasing difficulty of procuring the means of subsistence.
But Mr. Ricardo has not been satisfied with proving the position just stated. He has not been satisfied with shewing that the difficulty of procuring the food of the labourer is the only absolutely necessary cause of the fall of profits, in which I am ready fully and entirely to agree with him: but he has gone on to say, that there is no other cause of the fall of profits in the actual state of things that has any degree of permanence.(216) In this latter statement he appears to me to have fallen into precisely the same kind of error as I should have fallen into, if, after having shewn that the unrestricted power of population was beyond comparison greater than the power of the earth to produce food under the most favourable circumstances possible, I had allowed that population could not be redundant unless the powers of the earth to keep up with the progress of population had been tried to the uttermost. But I all along said, that population might be redundant, and greatly redundant, compared with the demand for it and the actual means of supporting it, although it might most properly be considered as deficient, and greatly deficient, compared with the extent of territory, and the powers of such territory to produce | additional means of subsistence; that, in such cases, notwithstanding the acknowledged deficiency of population, and the obvious desirableness of having it greatly increased, it was useless and foolish directly to encourage the birth of more children, as the effect of such encouragement, without a demand for labour and the means of paying it properly, could only be increased misery and mortality with little or no final increase of population.
Though Mr. Ricardo has taken a very different course, I think that the same kind of reasoning ought to be applied to the rate of profits and the progress of capital. Fully acknowledging that there is hardly a country in the four quarters of the globe where capital is not deficient, and in most of them very greatly deficient, compared with the territory and even the number of people; and fully allowing at the same time the extreme desirableness of an increase of capital, I should say that, where the demand for commodities was not such as to afford fair profits to the producer, and the capitalists were at a loss where and how to employ their capitals to advantage, the saving from revenue to add still more to these capitals would only tend prematurely to diminish the motive to accumulation, and still further to distress the capitalists, with little increase of a wholesome and effective capital.(217)
The first thing wanted in both these cases of deficient capital(218) and deficient population, is an effective demand for commodities, that is, a demand by those who are able and willing to pay an | adequate price for them; and though high profits are not followed by an increase of capital, so certainly as high wages are by an increase of population, yet I believe that they are so followed more generally than they appear to be, because, in many countries, as I have before intimated, profits are often thought to be high, owing to the high interest of money, when they are really low; and because, universally, risk in employing capital has precisely the same effect in diminishing the motive to accumulate and the reward of accumulation, as low profits. At the same time it will be allowed that determined extravagance, and a determined indisposition to save, may keep profits permanently high. The most powerful stimulants may, under peculiar circumstances, be resisted; yet still it will not cease to be true that the natural and legitimate encouragement to the increase of capital is that increase of the power and will to save which is held out by high profits; and under circumstances in any degree similar, such increase of power and will to save must almost always be accompanied by a proportionate increase of capital.
One of the most striking instances of the truth of this remark, and a further proof of a singular resemblance in the laws that regulate the increase of capital and of population, is to be found in the rapidity with which the loss of capital is recovered during a war which does not interrupt commerce. The loans to government convert capital into revenue, and increase demand at the same time | that they at first diminish the means of supply.* The necessary consequence must be an increase of profits. This naturally increases both the power and the reward of accumulation; and if only the same habits of saving prevail among the capitalists as before, the recovery of the lost stock must be rapid, just for the same kind of reason that the recovery of population is so rapid when, by some cause or other, it has been suddenly destroyed.
It is now fully acknowledged that it would be a gross error in the latter case, to imagine that, without the previous diminution of the population, the same rate of increase would still have taken place; because it is precisely the high wages occasioned by the demand for labour, which produce the effect of so rapid an increase of population. On the same principle it appears to me as gross an error to suppose that, without the previous loss of capital occasioned by the expenditure in question, capital should be as rapidly accumulated; because it is precisely the high profits of stock occasioned by the demand for commodities, and the consequent demand for | the means of producing them, which at once give the power and the will to accumulate.
Though it may be allowed therefore that the laws which regulate the increase of capital are not quite so distinct as those which regulate the increase of population, yet they are certainly just of the same kind; and it is equally vain, with a view to the permanent increase of wealth, to continue converting revenue into capital, when there is no adequate demand for the products of such capital, as to continue encouraging marriage and the birth of children without a demand for labour and an increase of the funds for its maintenance.(219)
But it has already been shewn &c.The consumption and demand, occasioned by the persons employed in producing any particular quantity of wealth, can never be a sufficient motive for producing it, if they are to have the whole of the commodities produced, and are to give for it only the labour which produced it; but suppose they take seven eighths of it, and their employer retains one eighth, with which he can again employ 5 or 10 additional men, who again take seven eighths of the commodities they produce, leaving the employer the power to employ additional labour the following year; cannot such accumulations go on while the land last cultivated1 will yield more food than is consumed by the cultivators?—when it will not do that, there is an end on every system to all accumulation. But if a society consisted of nothing but landowners, farmers,2 manufacturers of necessaries, and labourers, accumulation could go on to this point, provided only that population increased fast enough. If capital increased too rapidly for the population, instead of commanding seven eighths of the produce, they might command ninety nine hundredths,3 and thus there would be no motive for further accumulation. If every man were disposed to accumulate every portion of his revenue but what was necessary to his urgent wants such a state of things would be produced; for the principle of population is not strong enough to supply a demand for labourers so great as would then exist. But the condition of the labourer would then be most happy, for what can be more prosperous than the condition of him who has a commodity to sell for which there is an almost unlimited demand, while the supply is limited, and increases at a comparatively slow rate. All this is conformable to the general principle which has been often mentioned. Profits would be low because wages would be high, and would only continue so till population increased and labour again fell.
Mr. Malthus asks “how is it possible to suppose that the increased quantity of commodities, obtained by the increased number of productive labourers should find purchasers, without such a fall of price as would probably sink their value below the cost of production, or, at least, very greatly diminish both the power and the will to save?[”] To which I answer that the power and the will to save will be very greatly diminished, for that must depend upon the share of the produce allotted to the farmer or manufacturer. But with respect to the other question where would the commodities find purchasers? If they were suited to the wants of those who would have the power to purchase them, they could not fail to find purchasers, and that without any fall of price.
If a thousand hats, a thousand pairs of shoes, a thousand coats, a thousand ounces of gold, were produced, they would all have a relative value to each other, and that relative value would be preserved, if they were suited to the wants of the society, whether the greatest portion went to the labourers or to their employers.
If wages are low, only one half may1 perhaps be given to the labourers. If high three fourths—but whether in the hands of the masters or of the men they would not have a different value.
If £500 in money were in the hands of the masters, and 500 hats, 500 qrs. of corn &c. &c. and the remaining quantity in the hands of the workmen, they would have the same relative value, as if £600 money were in the hands of the masters and 600 of every other commodity, and the remaining quantity in the hands of the workmen. Which of these distributions shall take place depends on the proportions between capital and labour, but whichever it may be, no effect can be produced on price, if the commodities be suited to the wants of those who can command them. If they are not it is the interest of the producers to make them so. It follows then, from what I have here said, that if the commodities produced be suited to the wants of the purchasers, they cannot exist in such abundance as not to find a market.
Mistakes may be made, and commodities not suited to the demand may be produced—of these there may be a glut; they may not sell at their usual price; but then this is owing to the mistake, and not to the want of demand for productions. For every thing produced there must be a proprietor. Either it is the master, the landlord, or the labourer. Whoever is possessed of a commodity is necessarily a demander, either he wishes to consume the commodity himself, and then no purchaser is wanted; or he wishes to sell it, and purchase some other thing with the money, which shall either be consumed by him, or be made instrumental to future production. The commodity he possesses will obtain him this or it will not. If it will, the object is accomplished, and his commodity has found a market. If it will not what does it prove? that he has not adapted his means well to his end, he has miscalculated. He wants for example cotton goods, and he has produced cloth with a view to obtain them. Either there are cotton goods in the market or there are not—if there are, the proprietor wishes to sell them only with a view to purchase some other commodity—he does not want cloth, but he does want silks, linen, or wine—this at once indicates that the proprietor of cloth has mistaken the means by which to possess himself of cotton goods, he ought to have produced silks, linen or wine; if he had, there would not have been a glut of any commodity, as it is there is certainly a glut of one, namely cloth; and perhaps of two, because the cotton goods may not be required by any other person. But there may be no cotton goods in the market, what then should the person wanting them have produced to obtain them. Why, if there be no commodity with which he can purchase them, which is the most extravagant supposition1 , he can instead of producing cloth which he does not want, produce himself cotton goods which he does want. What I wish to impress on the readers mind is that it is at all times the bad adaptation of the commodities produced to the wants of mankind which is the specific evil, and not the abundance of commodities. Demand is only limited by the will and power to purchase.
Whoever has commodities has the power to consume, and as it suits mankind to divide their employments, individuals2 will produce one commodity with a view to purchase another; —these exchanges are mutually beneficial, but they are not absolutely necessary, for every man might employ his funds, and the labour at his command, in producing the very commodities he and his workmen intended to consume; in which case, there would be no market, and consequently there could be no glut. The division of the produce between master and men, is one thing;—the exchanges made between those to whom they are finally awarded, is another.
I have been thus particular in examining this question as it forms by far the most important topic of discussion in Mr. Malthus’ work3 . If his views on this question be correct—if commodities can be so multiplied that there is no disposition to purchase and consume them, then undoubtedly the cure which he hesitatingly recommends is a very proper one. If the people entitled to consume will not consume the commodities produced, themselves, nor cause them to be consumed by others, with a view to reproduction4 : if, of the two things necessary to demand, the will and the power to purchase5 the will be wanting, and consequently a general stagnation of trade has ensued, we cannot do better than follow the advice of Mr. Malthus, and oblige the Government to supply the deficiency of the people. We ought in that case to petition6 the King to dismiss his present economical ministers, and to replace them by others, who would more effectually promote the best interests of the country by promoting public extravagance and expenditure. We are it seems a nation of producers and have few consumers amongst us, and the evil has at last become of that magnitude that we shall be irretrievably miserable if the parliament or the ministers do not immediately adopt an efficient plan of expenditure.
The great mass of commoditiesIt is quite true that commodities may exist in such abundance, compared with labour, as to make their value so to fall, estimated in labour,1 as not to afford any inducement to their further production. In that case labour will command a great quantity of commodities. It is this that Mr. Malthus subsequently denies. If Mr. Malthus means that there may be such a glut of commodities as to make them ruinously cheap in labour2 I agree with him, but this is only saying that labour is so high that it absorbs all that fund which ought to belong to profits, and therefore the capitalist will have no interest in continuing to accumulate.3 But what will be the situation of the labourer? will that be miserable?
In the caseNo one denies this. They would fall in labour value, but not in money value.
If commodities were onlyI deny that the wants of the consumers generally4 are diminished by parsimony—they are transferred with the power to consume5 to another set of consumers. I acknowledge that the power and motive of the capitalist to accumulate would be checked.
Note. I deny and admit as above on the supposition that population does not increase with the same rapidity as the funds which are to employ it.
It is asserted that effectual demandIf I give an ounce of gold for a quarter of corn these commodities Mr. Malthus allows are equivalent to each other in exchange.
But he asks “may they not both be so plentiful as not to command more labour, or but very little more than they have cost? Would the demand for them be effectual? Would it be such as to encourage their continued production?[”] I answer with Mr. Malthus, Unquestionably not. But is this the subject in dispute? This is merely saying that when labour is exceedingly dear as compared with commodities, profits will be so low as to afford no inducement to accumulate. Who denies this proposition? Mr. Malthus original question was this, If capital is accumulated and a great quantity of commodities produced they will not exchange freely for each other in the market; there will be no demand for them.1 Can any two propositions be more different than these two. Because commodities are so plentiful as not to command much labour, would taxing the people and increasing the expenditure of Government raise profits, the only thing wanted to ensure the continued production of commodities?
But to fabricate &c.Mr. Malthus talks of “an economy of consumption, and a discouragement to the indulgence of those tastes and wants which are the very elements of demand.” The whole matter in dispute is centered in these few words. Mr. Say, Mr. Mill, and I say that there will be no economy of consumption no cessation of demand. What is Mr. Malthus’s own representation of the state of the case? “Commodities are so plentiful as not to command more labour or but very little more than they cost.” But if a great quantity of commodities will command little labour, every labourer will have the power to consume a great quantity of commodities. The will to consume exists wherever the power to consume is. Mr. Malthus proves that this power is not annihilated but is transferred to the labourer. We agree with him and say wherever the power and will to consume exists there will necessarily be demand.
In this remark I cannot quite agree with himI indeed say “that of commodities so limited in number there would be an universal glut.” But could such a state of things exist? Would only1 such a limited number of commodities be produced? Impossible, because the labourers would be glad to consume conveniences and luxuries if they could get them, and in the case supposed to promote the very object of the masters it would be their interest to produce the commodities for which their labourers had the will and power to pay.
But in this intercourse &c.Here again Mr. Malthus changes the proposition. We do not say that indolence may not be preferred to luxuries. I think it2 may and therefore if the question was respecting the motives to produce, there would be no difference between us. But Mr. Malthus supposes the motive strong enough to produce the commodities, and then contends there would be no market for them after they were produced, as there would be no demand for them.
It is this proposition we deny. We do not say the commodities will under all circumstances be produced, but if they are produced we contend that there will always be some who will have the will and power to consume them, or in other words there will be a demand for them. Mr. Malthus brings forward a case of a society1 not accumulating, preferring indolence to luxuries, not demanding labour, not cultivating their land as a proof of the evil effects which would result from the very opposite course; where capital would be accumulated, where activity would take place of indolence, where there would be the greatest demand for labour,—and where lands would be made the most productive; for all these are included in the meaning of the word accumulation. Men will prefer indolence to luxuries! luxuries will not then be produced, because they cannot be produced without labour, the opposite of indolence. If not produced they cannot want a market, there can be no glut of them.
Upon this principle it is supposedThe question discussed here is as to the motives for accumulation—that is not the question in dispute, we have spoken only of the effects of accumulation. There is a very marked distinction between these two questions.
The very definitionIn all this I agree but it is foreign to1 the question.
And a country such as our own which had been rich and populousThat is to say there being no motive to parsimony and accumulation, with such limited wants, there would be no parsimony and accumulation, and therefore a country with such parsimonious habits, would become poor and comparatively unpeopled.
But by this economy he would disable the manufacturer from purchasing the same amount of his produceTrue, but would not the manufacturer’s labourers purchase it, or something that would be made instead of it?
There would evidently therefore be a general want of demand, both for produce and population.The specific want would be for population. “It would be of no sort of use,” says Mr. Malthus, “to the farmer to go on cultivating his land with a view merely to give food and clothing to his labourers, if he neither consumed the surplus of what they produced himself, nor could realize it in a shape that might be transmitted to his descendants.” What but a deficiency of population could prevent him from realizing it in a shape that might be transmitted to his descendants. I am a farmer possessed of a thousand quarters of corn, and my object is to accumulate a fortune for my family. With this corn I can employ a certain number of men on the land, which I rent, and after paying my rent the first year, realize 1300 qrs., or 300 qrs. profits. The next year if there be plenty of labour in the market, I can employ a greater quantity than before, and my 1300 quarters will become 1700, and so from year to year I go on increasing the quantity till I have made it ten thousand quarters, and if labour be at the same price can command ten times the quantity of it that I could when I commenced my operations.* Have I not then accumulated a fortune for my family? have I not given them the power of employing labour in any way they please, and of enjoying the fruits of it? And what is to prevent me doing so but an increase in the price of labour, or a diminution in the productive powers of the land? Of the latter we have already spoken; that necessarily limits all accumulation. Of the increase of the price of1 labour I have also spoken; if population did not keep pace with capital, labour would rise, and the quantity of corn which I should annually obtain, instead of increasing in the proportions of 1000, 1300, 1700 and so on, might, by the sacrifices I should be obliged to make to obtain the labour required, increase my capital only in the proportions 1000, 1200, 1300 &c. &c. The precise reason then that my accumulation goes on at a slow pace, is that there is a scarcity of labour; how then can Mr. Malthus make it appear that “there will be a general want of demand both for produce, and population.” Mr. Malthus may indeed say that my operations will increase the quantity of corn faster than it will be required to feed the actual population.
I grant it, but if my object be accumulation why should I produce corn particularly, why not any other commodity which may be in demand?
From want of demand suchThere is a great desire to accumulate capital. This is the supposition. The consequences according to Mr. Malthus will be, that the labourer “will be ill paid, and his wages both with regard to the quantity of food, which he receives and the labour required to produce it, may be decidedly low.”
That is to say, I am desirous to accumulate capital from my revenue—if I employ my revenue as capital I shall want labour, the labourer can produce abundantly, and yet he will be ill paid in the commodity which he produces, and to crown the whole I shall not have large profits nor be able to get rich.
If it be saidUnder the circumstances supposed the labourer would either get a large proportion of the corn produced on the last land, or he would not get a large proportion of the goods made by the manufacturer. The farmer on the last land is a manufacturer of corn, he pays no rent. In whatever proportions between masters and workmen1 the produce may be divided in manufactures, in the same proportions will the corn be divided, the produce of agriculture.2
Labour cannot be high in one and low in the other, nor profits either. I think labour would be high in both—but Mr. Malthus protests against calling the labourers wages high because he is well remunerated in commodities. Now Mr. Malthus is the last man from whom this objection should come; from him we ought not to have heard that “this is using an old term in a new sense or adopting a new one, and would give the notion that it was the specific intention of the writer to keep his reader as much as possible in the dark as to the real state of things.” I say Mr. Malthus should be the last man to do so because we are told by him that money wages are only nominal wages, that the real wages of labour consist in the abundance of necessaries and conveniences which those wages enable the labourer to command. In fact that it is these conveniences and necessaries which constitute real value, and every thing but them is nominal. I find then that in3 the real value the labourer is well paid, and when I say that his wages are therefore high Mr. Malthus gravely tells me I use terms in a new sense which can have no other effect but to mislead and perplex.
Let it not be supposed that I adopt Mr. Malthus’ measure on this occasion, wages are high both in his measure and in mine. The labourer will receive a large proportion of the produce, and therefore I say his wages are high. His wages will be high in money, unless money has varied in value, forthe same causes that operate to induce the farmer and manufacturer to give high wages in their commodities, must induce the holder of money to give high wages in his. No sufficient reason is advanced why money, corn, and manufactures shall alter in relative value.
Under such circumstancesCorn might be produced which would lose the character of wealth!—it would then be exceedingly cheap; cheap as compared with manufactures, cheap as compared with labour, and yet Mr. Malthus says that wages might be decidedly low. Low in what? not in corn his1 real measure of value. See 357.2
I would observe furtherThe farmers Mr. Malthus says could not employ their capitals in any other way than on the land—I contend that they would employ them another way3 for in that way they would not be productive of profit. Either capitalists or labourers would have the right to demand the produce of labour. What they demanded would be produced.
If in the process of savingHere the difference between Mr. Malthus and me is fairly stated. The reader must judge on which side truth lies.
Parsimony, or the conversion of revenue into capital may take place without any diminution of consumptionI say it always take place without any diminution of consumption. Mr. Malthus clogs the proposition with a condition “if the revenue increases first.” I do not understand what Mr. M. means:—if the revenue increases first. Before what?1
All that I mean to say isBy accumulation of capital from revenue is meant an increase of consumption by productive labourers instead of by unproductive labourers. Consumption is as certain in one case as in the other, the difference is only2 in the quantity of productions returned.
But Mr. Ricardo has not beenHave I not said that profits depend in all cases on wages, and I refer to my chapter on wages with confidence to shew that I have admitted other causes besides the difficulty of producing food, for high wages and for periods too of considerable duration.
Though Mr. RicardoHere again it is said that capital may be deficient, population abundant, and consequently wages low, and yet that the employment of capital will not be attended with1 fair profits to the producer of commodities.
I should be glad if Mr. Malthus would tell us what he means by low wages in this case. I call wages in many cases2 high, though nominally low, if they be paid to a man who will do little or no work.
If I had said that it was desirable to go on accumulating capital when it yielded no profits to the producer, there might have been some foundation for this charge. It is not desirable to the capitalist, but it is never injurious to the country—it would be as reasonable to complain of too much production as of too much air, or water.3 I say under such circumstances capital will not be accumulated.
The first thing wantedWhat is here meant by deficient capital? If capital is deficient can any evil arise from accumulating capital by saving4 from revenue;—from increasing the thing that is deficient?
Does not Mr. Malthus mean deficient profits on capital? With a deficient capital profits would be high.
Though it may be allowedThe1 temptation to increase capital does not arise from the demand for its products, for that never fails; but from the profits arising from the sale of the products.—High wages may totally destroy those profits.
What Mr. Malthus calls a demand for capital I call high profits—capital is not bought and sold, it is borrowed at interest, and a great interest is given when profits are high. Mr. Malthus’ language appears to me in this instance2 “new and unusual.”3
Of the Fertility of the Soil considered as a Stimulus to the continued Increase of Wealth
[A fertile soil gives at once the greatest natural capability of wealth that a country can possess; and in speaking of the deficient wealth of a fertile country, it is meant to speak comparatively rather than positively.
The settlers upon a very rich soil, with a vicious division of property at first, and unfavourably situated with regard to markets, might increase very slowly in wealth and population, and would be very likely to acquire indolent habits.]
It has been said, that those who have food and necessaries at their disposal will not be long in want of workmen, who will put them in possession of some of the objects most useful and desirable to them.* But this appears to be directly contradicted by experience. If the establishment, extension, and refinement of domestic manufactures were so easy a matter, our ancestors would not have remained for many hundred years so ill supplied with them; and been obliged to expend the main part of their raw produce in the support of idle retainers. They might be very ready, when | they had the opportunity, to exchange their surplus raw produce for the foreign commodities with which they were acquainted, and which they had learnt to estimate. But it would be a very difficult thing, and very ill suited to their habits and degree of information, to employ their power of commanding labour in setting up manufactures on their own estates. Though the land might be rich, it might not suit the production of the materials most wanted; and the necessary machinery, the necessary skill in using it, and the necessary intelligence and activity of superintendance, would all unavoidably be deficient at first, and under the circumstances supposed, must be of very slow growth; so that after those ruder and more indispensable articles were supplied, which are always wanted and produced in an early stage of society, it is natural enough that a great lord should prefer distinguishing himself by a few splendid foreign commodities, if he could get them, and a great number of retainers, than by a large quantity of clumsy manufactures, which involved great trouble of superintendance.(220)
It is certainly true, however, taking as an instance an individual workman, and supposing him to possess a given degree of industry and skill, that the less time he is employed in procuring food, the more time will he be able to devote to the procuring of conveniences and luxuries; but to apply this truth to whole nations, and to infer that the greater is the facility of procuring food, the more abundantly will the people be supplied with con-|veniences and luxuries would be one among the many rash and false conclusions which are often made from the want of due attention to the change which the application of a proposition may make in the premises on which it rests. In the present case, all depends upon the supposition of a given degree of industry and skill, and the means of employing them. But if, after the necessaries of life were obtained, the workman should consider indolence as a greater luxury than those which he was likely to procure by further labour, the proposition would at once cease to be true. And as a matter of fact, confirmed by all the accounts we have of nations, in the different stages of their progress, it must be allowed that this choice seems to be very general in the early periods of society, and by no means uncommon in the most improved states.(221)
Few indeed and scanty would be the portion of conveniences and luxuries found in society, if those who are the main instruments of their production had no stronger motives for their exertions than the desire of enjoying them. It is the want of necessaries which mainly stimulates the labouring classes to produce luxuries; and were this stimulus removed or greatly weakened, so that the necessaries of life could be obtained with very little labour, instead of more time being devoted to the production of conveniences, there is every reason to think that less time would be so devoted.(222)
At an early period of cultivation, when only rich soils are worked, as the quantity of corn is the | greatest, compared with the quantity of labour required to produce it, we ought always to find a small portion of the population engaged in agriculture, and a large portion engaged in administering to the other wants of the society. And there can be little doubt that this is the state of things which we really should see, were it true, that if the means of maintaining labour be found, there can be no difficulty in making it produce objects of adequate value; or that when food can be obtained with facility, more time will be devoted to the production of conveniences and luxuries. But in examining the state of unimproved countries, what do we really see?—almost invariably, a much larger proportion of the whole people employed on the land than in those countries where the increase of population has occasioned the necessity of resorting to poor soils; and less time instead of more time devoted to the production of conveniences and luxuries.(223)
Of the great landed nations of Europe, and indeed of the world, England, with only one or two exceptions, is supposed to have pushed its cultivation the farthest; and though the natural qualities of its whole soil by no means stand very high in the scale of comparative richness, there is a smaller proportion of the people employed in agriculture, and a greater proportion employed in the production of conveniences and luxuries, or living on monied incomes, than in any other agricultural country of the world. According to a calculation of Susmilch, in which he enumerates the different proportions | of people in different states, who live in towns, and are not employed in agriculture, the highest is that of seven to three, or seven people living in the country to three living in the towns:* whereas in England, the proportion of those engaged in agriculture, compared with the rest of the population, is less than as two to three.†
This is a very extraordinary fact, and affords a striking proof how very dangerous it is, in political economy, to draw conclusions from the physical quality of the materials which are acted upon, without reference to the moral as well as physical qualities of the agents.(224)
It is undoubtedly a physical quality of very rich land, if worked by people possessing a given degree of industry and skill, to yield a large quantity of produce, compared with the number of hands employed; but, if the facility of production which rich land gives has the effect, under certain circumstances, of preventing the growth of industry and skill, the land may become practically less productive, compared with the number of persons employed upon it, than if it were not distinguished for its richness.
Upon the same principle, the man who can procure the necessary food for his family, by two days labour in the week, has the physical power of working much longer to procure conveniences | and luxuries, than the man who must employ four days in procuring food; but if the facility of getting food creates habits of indolence, this indolence may make him prefer the luxury of doing little or nothing, to the luxury of possessing conveniences and comforts; and in this case, he may devote less time to the working for conveniences and comforts, and be more scantily provided with them than if he had been obliged to employ more industry in procuring food.
Among the crowd of countries which tend more or less to illustrate and confirm by their present state the truth of these positions, none perhaps will do it more strikingly than the Spanish dominions in America, of which M. Humboldt has lately given so valuable an account.(225)
Speaking of the different plants which are cultivated in New Spain, he says of the banana, “Je doute qu’il existe une autre plante sur le globe qui, sur un si petit espace de terrain, puisse produire une masse de substance nourrissante aussi conside´rable.”* He calculates in another place more particularly, that “dans un pays e´minemment fertile un demi hectare, ou un arpent le´gal cultive´ en bananes de la grande espe‘ce, peut nourrir plus de cinquantes individus, tandis qu’en Europe le měme arpent ne donneroit par an, en supposant le huitie‘me grain, que 576 kilogrammes de farine de froment, quantite´ qui n’est pas suffisante pour la subsistance de deux individus: aussi rien ne frappe plus l’Europe´en | re´cemment arrive´ dans la zone torride que l’extrěme petitisse des terrains cultive´s autour d’une cabane qui renferme une famille nombreuse d’indige‘nes.”†
[The produce of the banana, compared with the labour employed upon it, is so prodigious, that the inhabitants of the districts where it prevails will never, it is said, be roused from their excessive indolence till the cultivation of it has been prohibited.
Though the labouring classes have such ample time to work for conveniences and comforts, they are almost destitute of them; and from improvident habits, suffer at times even for want of food.
This poverty is not confined to the lower regions of New Spain. In ascending the Cordilleras to the finest climates in the world, the state of things is not very different.
Maize, which is the chief food of the people on the Cordilleras, very greatly exceeds in productiveness the grains of Europe.
Even in the town of Mexico subsistence may be obtained by one or two days’ labour in the week, yet the people are wretchedly poor.
The same poverty prevails in the country districts; and famines, from the failure of the crops of maize, combined with the indolence and improvidence of the people, are frequent, and are mentioned by Humboldt as the most destructive check to population.
Such habits of indolence and improvidence necessarily act as formidable obstacles in the way of a rapid increase of wealth and population.]
That the indolence of the natives is greatly aggravated by their political situation, cannot for a moment be doubted; but that, in spite of this situation, it yields in a great measure to the usual excitements is sufficiently proved by the rapid cultivation which takes place in the neighbourhood of a new mine, where an animated and effective demand is created for labour and produce. “Bientôt le besoin re´veille l’industrie; on commence a‘ labourer le sol dans les ravins, et sur les pentes des montagnes voisines, par tout ou‘ le roc est couvert de terreau: des fermes s’e´tablissent dans le voisi-|nage de la mine: la cherte´ des vivres, le prix conside´rable auquel la concurrence des acheteurs maintient tous les produits de l’agriculture, de´dommagent le cultivateur des privations auxquelles l’expose la vie pe´nible des montagnes.”‡(226)
When these are the effects of a really brisk demand for produce and labour, we cannot be at a loss for the main cause of the slow cultivation which has taken place over the greatest part of the country. Except in the neighbourhood of the mines and near the great towns, the effective demand for produce is not such as to induce the great proprietors to bring their immense tracts of land properly into cultivation: and the population, which, as we have seen, presses hard against the limits of subsistence, evidently exceeds in general the demand for labour, or the number of persons which the country can employ with regularity and constancy in the actual state of its agriculture and manufactures.(227)
In the midst of an abundance of fertile land, it appears that the natives are often very scantily supplied with it. They would gladly cultivate portions of the extensive districts held by the great proprietors, and could not fail of thus deriving an ample subsistence for themselves and families; but in the actual state of the demand for produce in many parts of the country, and in the actual state of the ignorance and indolence of the natives, such tenants might not be able to pay a rent equal to | what the land would yield in its uncultivated state, and in this case they would seldom be allowed to intrude upon such domains; and thus lands which might be made capable of supporting thousands of people, may be left to support a few hundreds of cattle.
Speaking of a part of the Intendency of Vera Cruz, Humboldt says, “Aujourd’hui des espaces de plusieurs lieues carre´es sont occupe´s par deux ou trois cabanes, autour desquelles errent des boeufs a‘ demi-sauvages. Un petit nombre de familles puissantes, et qui vivent sur le plateau central, posse‘dent la plus grande partie du littoral des Intendances de Vera Cruz, et de San Luis Potosi. Aucune loi agraire ne force ces riches proprie´taires de vendre leurs majorats, s’ils persistent a‘ ne pas vouloir de´fricher euxměmes des terres immenses qui en de´pendent.”*
Among proprietors of this description, caprice and indolence might often prevent them from cultivating their lands.(228) Generally, however, it might be expected, that these tendencies would yield, at least in a considerable degree, to the more steady influence of self-interest. But a vicious division of territory prevents the motive of interest from operating so strongly as it ought to do in the extension of cultivation. Without sufficient foreign commerce to give value to the raw produce of the land; and before the general introduction of manufactures had opened channels | for domestic industry, the demand of the great proprietors for labour would be very soon supplied; and beyond this, the labouring classes would have nothing to give them for the use of their lands. Though the landholders might have ample power to support an extended population on their estates, the very slender increase of enjoyments, if any, which they might derive from it, would rarely be sufficient to overcome their natural indolence, or overbalance the possible inconveniences or trouble that might attend the proceeding. Of that encouragement to the increase of population, which arises from the division and sub-division of land as new families are brought into being, the country is deprived by the original state of property, and the feudal customs and habits which it necessarily tends to generate. And under these circumstances, if a comparative deficiency of commerce and manufactures, which great inequality of property tends rather to perpetuate than to correct, prevents the growth of that demand for labour and produce, which can alone remedy the discouragement to population occasioned by this inequality, it is obvious that Spanish America may remain for ages thinly peopled and poor, compared with her natural resources.
And so, in fact, she has remained. For though the increase of population and wealth has been considerable, particularly of late years, since the trade with the mother-country has been more open, yet altogether it has been far short of what it would have been, even under a Spanish govern-|ment, if the riches of the soil had been called forth by a better division of landed property, or a greater and more constant demand for raw produce.
Humboldt observes that “Les personnes qui ont re´fle´chi se´rieusement sur la richesse du sol Mexicain savent que, par le moyen d’une culture plus soigne´e, et sans supposer des travaux extraordinaires pour l’irrigation des champs, la portion de terrain de´ja‘de´friche´ pourroit fournir de la subsistance pour une population huit a‘ dix fois plus nombreuse.” He then adds, very justly, “Si les plaines fertiles d’Atalisco, de Cholula et de Puebla ne produisent pas des re´coltes plus abondantes, la cause principale doit ětre cherche´e dans le manque des consommateurs, et dans les entraves que les ine´galite´s du sol opposent au commerce inte´rieur des grains, surtout a‘ leur transport vers les côtes qui sont baigne´es par la mer des Antilles.”†(229) In the actual state of these districts, the main and immediate cause which retards their cultivation is indeed the want of consumers, that is, the want of power to sell the produce at such a price as will at once encourage good cultivation, and enable the farmers to give the landlords something that they want, for the use of their land. And nothing is so likely to prevent this price from being obtained, as any obstacles natural or artificial to internal and external commerce.
[That it is the want of demand rather than the want of capital which retards the progress of wealth in New Spain, may be inferred from the abundance of capital noticed by Humboldt.
Altogether, the state of New Spain strongly illustrates the position, that fertility of soil alone is not an adequate stimulus to the increase of wealth.
A similar conclusion may be drawn from the state of Ireland.]
The cultivation of the potatoe, and its adoption as the general food of the lower classes of the people in Ireland, has rendered the land and labour necessary to maintain a family, unusually small, compared with most of the countries of Europe. The consequence of this facility of production, unaccompanied by such a train of fortunate circumstances as would give it full effect in the increase of wealth, is a state of things resembling, in many respects, countries less advanced in civilization and improvement.
The prominent feature of Ireland is, the power which it possesses and actually exercises, of supporting a much greater population than it can employ, and the natural and necessary effect of this state of things, is the very general prevalence of habits of indolence. The landed proprietors and principal tenants being possessed of food and necessaries, or at least of the ready means of procuring them, have found workmen in abundance at their command; but these workmen not finding sufficient employment in the farms on which they had settled, have rarely been able to put their landlords in possession of the objects “most useful and most desirable” to them.(230)
Sometimes, indeed, from the competition for land occasioned by an overflowing population, very high rents have been given for small portions of ground fit for the growth of potatoes; but as the power of paying such rents must depend, in a considerable degree, upon the | power of getting work, the number of families upon an estate, who can pay high money rents, must have an obvious limit. This limit, there is reason to believe, has been often found in the inability of the Irish cottar to pay the rent which he had contracted for; and it is generally understood that the most intelligent Irish landlords, influenced both by motives of humanity and interest, are now endeavouring to check the progress of that redundant population upon their estates, which, while it generates an excessive degree of poverty and misery as well as indolence, seldom makes up to the employer, in the lowness of wages, for the additional number of hands which he is obliged to hire, or call upon for their appointed service in labour. He is now generally aware that a smaller number of more industrious labourers would enable him to raise a larger produce for the consumption of towns and manufacturers, and at the same time that they would thus contribute more largely to the general wealth of the country, would be in a more happy condition themselves, and enable him to derive a larger and more certain rent from his estates. It may fairly be said therefore, that the possessors of food and necessaries in Ireland have not been able to obtain the objects most useful and desirable to them in return.
The indolence of the country-labourers in Ireland has been universally remarked.
[The time which the Irish labourer has to spare does not, as appears from experience, put him in possession of an ample quantity of conveniences and luxuries.
The Irish peasant has not been exposed to the usual excitements which create industry, owing to the abundance of people compared with the work to be done.
If the labour of the Irish peasant, whether in the house or in the field, were always in demand, his habits might soon change.]
It may be said, perhaps, that it is capital alone which is wanted in Ireland, and that if this want were supplied, all her people might be easily employed. That one of the great wants of Ireland is capital will be readily allowed; but I conceive it would be a very great mistake to suppose that the importation of a large quantity of capital, if it could be effected, would at once accomplish the object required, and create a quantity of wealth proportioned to the labour which seems ready to be employed in its production. The amount of capital which could be laid out in Ireland in preparing goods for foreign sale, must evidently depend upon the state of foreign markets; and the amount that could be employed in domestic manufactures, must as evidently depend upon the domestic demand.(231) An attempt to force a foreign market by means of capital, must necessarily occasion a premature fall of profits, and might, after great losses, be quite ineffectual; and with regard to the domestic demand, while the habits of the great mass of the people are such as they are at present, it must be quite inadequate to take off the products of any considerable mass of new capital. In a country, where the necessary food is obtained with so little labour, and the population is still equal or nearly equal to the produce, it is perhaps impossible that the time not devoted to the produc-|tion of food should create a proportionate quantity of wealth, without a very decided taste for conveniences and luxuries among the lower classes of society, and such a power of purchasing as would occasion an effective demand for them. But it is well known, that the taste of the Irish peasant for articles of this description is yet to be formed. His wants are few, and these wants he is in the habit of supplying principally at home. Owing to the cheapness of the potatoe, which forms the principal food of the lower classes of the people, his money wages are low; and the portion which remains, after providing absolute necessaries, will go but a very little way in the purchase of conveniences. All these circumstances are most unfavourable to the increase of wealth derived from manufactures destined for home consumption. But the tastes and habits of a large body of people are extremely slow in changing; and in the mean time the application of capital in larger quantities than was suited to the progress of the change, would certainly fail to yield such profits as would encourage its continued accumulation and application in the same way. In general it may be said that demand is quite as necessary to the increase of capital as the increase of capital is to demand. They mutually act upon and encourage each other, and neither of them can proceed with vigour if the other be left far behind.
[In general, the checks which Irish manufactures and productions have received, have been more owing to want of demand than want of capital. Demand has generally produced capital, though capital has sometimes failed to produce demand.
Ireland might be much richer than England if her redundant population were employed in commerce and manufactures; but to accomplish this object, a change of habits would be more effectual than a premature supply of capital.]
The state of Ireland then may be said to lead to nearly the same conclusions as that of New Spain, and to shew—
That the power of supporting labour may often exist to a much greater extent than the will;(232)
That the necessity of employing only a small portion of time in producing food does not always occasion the employment of a greater portion of time in procuring conveniences and luxuries;(233)
That the deficiency of wealth in a fertile country may be more owing to want of demand than to want of capital;(234)
And, in general, that the fertility of the soil alone is not an adequate stimulus to the permanent increase of wealth.(235)
It has been saidThe observation was applied to this country and not to countries only half civilized.
It is certainly true howeverIf the labourers wages were high he might do as he pleased —he might prefer indolence or luxuries—but if his wages were low, and profits high,1 he has not a choice, he must produce conveniences and luxuries for his master or starve; and their amount and quality would depend on the facility, and time, which might be required to produce them.
Few indeed and scantyUnder the present circumstances of England, would not Mr. Malthus think that the situation of the labourer would be improved, if he could produce more necessaries in the same time, and with the same labour. Would he be alarmed at the love of indolence which would be the consequence?
But in examining the state of unimproved countriesAn argument concerning the skill, state and power of the most improved country is answered by a reference to the state of unimproved countries, where they are without skill, and without even a knowledge of the comforts of the commonest conveniences. Is it true that all these countries obtain food with great facility? If they have not our improvements, they are without some of our means of producing, with a small quantity of labour. Mr. Malthus says there is1 a smaller proportion of the people employed in Agriculture in England than elsewhere. This is very possible, and very satisfactory if true, but we must not leave out of consideration the greater number of horses and cattle employed on the land in England; they come under the denomination of labourers, for they are substituted for them, and are supported by provisions like them.*
This is a very extraordinary factWhoever did draw any conclusions from the physical quality of the soil1 , without any consideration of its productiveness, in proportion to the labour employed upon it? Mr. Malthus bestows a great deal of time in endeavoring to refute what has never been advanced. He supposes me to have said that profits in all countries depend upon the fertility of the land last taken into cultivation, and he has been at great pains to shew this opinion unfounded.—I never entertained any such opinion, nor do not know who does.
Profits in every country are in proportion2 to the productiveness of labour on the last land cultivated,—provided3 always that the labourers in each are contented with the same quantity of necessaries; but as this is not the case, as from various causes the recompence for labour varies, profits depend upon the proportion of the whole produce, on the land last cultivated, which must be given to obtain it.
Among the crowd of countriesHere again Mr. Malthus gives an elaborate proof of what is not disputed. Countries do now always4 produce in proportion to their means of producing! Granted. But what inference will Mr. Malthus draw from this?—will he say he is5 an enemy to giving new facilities to the production of corn in England, because it will make the people indolent —they will make them6 lose their taste for luxuries, and will induce them to be contented with the commonest fare? He must mean this or his argument points at nothing. See the effects of cheap means of production in South America, look at the indolent race of inhabitants in that country. Why are we to look to them, but as an example and a warning, if we listen to the dangerous projects of those who would make corn cheap in this country? My great complaint against Mr. Malthus is that he is constantly departing from the question in dispute. He first begins by disputing the position whether certain measures will make corn cheap, but before the end of the argument, he is endeavoring to prove that it would not be expedient that it should be cheap, on account of the moral effects which it would have on the people. These are two very distinct propositions.
It has been well said by M. Say that it is not the province of the Political Economist to advise:1 —he is to tell you how you may become rich, but he is not to advise you to prefer riches to indolence, or indolence to riches.
That the indolence of the nativesThis fact respecting the mine shews how little the whole argument about South America is applicable to England. Indeed it appears to me surprising that it should be brought forward in justification of the opinion that both capital and people, may be at the same time redundant in England.
Because I said, in reference to this country, and countries resembling it, “If I had food and necessaries at my disposal I should not be long in want of workmen who would put me in possession of some of the objects most useful or most desirable to me,” Mr. Malthus has put the proposition in the most general form and says “it has been said that those who have food and necessaries at their disposal will not be long in want of men &c. &c.”1 He then refers to South America—endeavors to shew that there are persons there who have food and necessaries at their command but who do not employ workmen 1st because they do not want conveniences and luxuries, 2dly because the workmen have no skill in making them if the want existed, and besides are an indolent race, stimulated to work with great difficulty and 3dly because the commodity which can be most easily produced has so very confined a market, that there is a perpetual glut of it. Much of this statement respecting South America might be answered—the whole might be shewn to be perfectly consistent with the principles which it is brought forward to overturn, but it is so little applicable to countries with a dense population2 abounding in capital, skill, commerce, and manufacturing industry, and with tastes for every enjoyment that nature, art or science will procure, that it does not require a serious examination.
Except in the neighbourhoodTo me there appears a direct contradiction in this passage. “The effective demand for produce is not such as to induce the great proprietors to bring their immense tracts of land properly into cultivation.” Can nothing be obtained for produce? Cannot labour be had in exchange for it? and may not all riches be obtained by means of labour? Mr. Malthus shall answer these questions. “The population presses hard against the limits of subsistence, and evidently exceeds in general the demand for labour, or the number of persons which the country can employ with regularity and constancy in the actual state of its agriculture.” Here is a country the amount of the fertility of which is almost fabulous and incredible, with a numerous people pressing hard against the means of subsistence—willing to exchange their labour for produce, and yet there is so little demand for produce as not to afford a motive for the cultivation of their lands.
Among proprietors of this description, caprice and indolence might often prevent them from cultivating their landsIf so it is not to a want of demand for produce that we must attribute their not being cultivated. “A vicious division of territory prevents the motive of interest from operating so strongly as it ought to do in the extension of cultivation.” This I can understand,—but this is not the case in Europe. Mr. Malthus said before that the motive of interest did not exist because there was no demand for produce.
Humboldt observesMr. Malthus says “He then adds very justly ‘Si les plaines fertiles d’Atalisco, de Cholula et de Puebla ne produisent pas des re´coltes plus abondantes, la cause principale doit ětre cherche´e dans le manque des consommateurs.’” Can it be true that in such a country there is a scanty demand for labour, and a people pressing against the limits of subsistence? See page 389.1
The prominent feature of Ireland is, the power which it possesses and actually exercises, of supporting a much greater population than it can employ, and the natural and necessary effect of this state of things, is the very general prevalence of habits of indolence.That Ireland supports a greater population than she employs may be true, but she does not support a greater than she has the means of employing. Whoever eats, and is in health, may be made to work if he has no other means of obtaining food. From Mr. Malthus’ statement it appears that very little work is done in Ireland, although a great population is supported,—in that country then for the quantity of labour performed a great price is paid—the capitalist has only a moderate1 proportion of the produce, and therefore according to my theory profits are not very high,—they are not high2 in proportion to the cheapness of food. Mr. Malthus denies this deduction. He contends that landlords and capitalists are the possessors of a great quantity of food and necessaries, and yet have not been able to obtain the objects most useful and desirable to them in return. Profits do not depend upon quantity, but upon proportions. Why have not capitalists been able to obtain the objects most useful and desirable to them with the quantity of food and necessaries they possess? because in the actual state of skill and industry in Ireland a great quantity of this food, or what is the same thing the value of a great quantity must be paid for the result of a very moderate degree of skill and industry; and secondly, because the peculiar food and necessaries of Ireland are not of great3 value in other countries, and therefore in those countries they will not exchange for any great quantity of the skill and industry of other countries. I have not4 said that food and clothing which will support 100 men will procure the means of obtaining the same quantity of things useful and desirable in England, Ireland or South America, but I have said that they will procure things useful and desirable according to the state of skill and industry in the respective countries. If there be no skill in the country, and the commodities produced have no value in other countries, there will be little motive to accumulate capital or if there be skill in the country, and it be very rare and costly, that also may be a1 reason why capital will not be rapidly accumulated. But what have all these suppositions to do with England, the country of which I was particularly speaking?
Is there any want of skill and industry here? Are there no objects useful and desirable to be procured by those who have the means of commanding labour? What limits the ability of those possessed of the means of commanding labour of obtaining these useful and desirable objects, but the price of labour? If it be high, the labourers will have the means of getting a part of these luxuries, if it be low, almost the whole will go to those who have the means of employing them.
In the case of Ireland Mr. Malthus does not estimate its wealth by its power of commanding labour, his standard measure of value, but by the things useful and desirable which this power will enable it to obtain.
What is the use of a measure of value if we never estimate value by it?
The amount of capital which could be laid out inIreland &c. &c. If Ireland had equal skill in working up commodities with other countries, and her labour was really, and not nominally low; if a great deal of work could be procured for a very little money, what limit could there be to sales in foreign markets. If she sold would she not also purchase. Might she not successfully compete with all other countries in the goodness and cheapness of her goods? If the mass of the people would but work there would not be any deficiency of home demand. The want of demand only arises from a want of means. As soon as the results of labour were obtained, there would be not only the desire1 but the means also of consuming them.
That the power of supporting labour may often exist to a much greater extent than the willThis must refer to the capitalist and not to the labourer, and is not I think applicable to Ireland. Is there any capital there unemployed?
That the necessity &c. &c.Certainly not, if the choice be in the power of the labourers, in which case their wages must be high, or rather they must be paid well for their work. As certainly yes, if labour be low, and the choice be in the power of the capitalists. To suppose otherwise is to suppose that much of the1 capital will be unemployed.
That the deficiency of wealth &c. &c.True if wages be really high, not true if they be low.
And, in general, &c. &c.True if the people be indolent, be well paid, and be easily satisfied.
Of Inventions to abridge Labour, considered as a Stimulus to the continued Increase of Wealth
[Inventions to save manual labour are generally called forth by the wants of mankind in the progress of improvement; and therefore seldom much exceed those wants.
But the same laws apply to machinery as to fertile land: a full use cannot be made of either without an adequate market.
The natural tendency of machinery is, by cheapening the commodity produced, so to extend the market for it, as to increase its whole value. This has been strikingly the case in the cotton trade; and when machinery has this effect, its enriching power is prodigious.]
When however the commodity to which machinery is applied is not of such a nature, that its consumption can extend with its cheapness, the increase of wealth derived from it is neither so great nor so certain. Still however it may be highly beneficial; but the extent of this benefit depends upon a contingency. Let us suppose a number of capitalists in the habit of employing 20,000l. each in a manufacture of limited consumption, and that machines were introduced which, by the saving of labour, would enable them to supply the actual demand for the commodity with capitals of ten thousand pounds each, instead of twenty. There would, in this case, be a certain number of ten thousand pounds, and the men employed by these capitals, thrown out of employment. On the other hand, there would be a portion of revenue set free for the purchase of fresh commodities; and this demand would undoubtedly be of the greatest advantage in encouraging the | employment of the vacant capitals in other directions. At the same time it must be recollected that this demand is not a new one, and, even when fully supplied, could only replace the diminution of capital and profits in one department, occasioned by the employment of so many ten thousands, instead of twenty thousands. But in withdrawing capital from one employment and placing it in another, there is almost always a considerable loss. Even if the whole of the remainder were directly employed, it would be less in amount. Though it might yield a greater produce, it would not command the same quantity of labour as before; and, unless more menial servants were used, many persons would be thrown out of work; and thus the power of the whole capital to command the same quantity of labour would evidently depend upon the contingency of the vacant capitals being withdrawn undiminished from their old occupations, and finding immediately equivalent employment in others.(236)
If, in order to try the principle, we were to push it farther, and to suppose that, without any extension of the foreign market for our goods, we could by means of machinery obtain all the commodities at present in use, with one third of the labour now applied, is it in any degree probable that the mass of vacant capitals could be advantageously employed, or that the mass of labourers thrown out of work could find the means of commanding an adequate share of the national produce? If there were other foreign trades which, by means of the | capital and labour thrown out of employment, might be greatly extended, the case would be at once quite altered, and the returns of such trades might furnish stimulants sufficient to keep up the value of the national income. But, if only an increase of domestic commodities could be obtained, there is every reason to fear that the exertions of industry would slacken. The peasant, who might be induced to labour an additional number of hours for tea or tobacco, might prefer indolence to a new coat. The tenant or small owner of land, who could obtain the common conveniences and luxuries of life at one third of their former price, might not labour so hard to procure the same amount of surplus produce from the land. And the trader or merchant, who would continue in his business in order to be able to drink and give his guests claret and champagne, might think an addition of homely commodities by no means worth the trouble of so much constant attention.(237)
It has been said that, when there is an income ready for the demand, it is impossible that there should be any difficulty in the employment of labour and capital to supply it, as the owner of such an income, rather than not spend it, would purchase a table or chair that had cost the labour of a hundred men for a year. This may be true, in cases of fixed monied revenues, obtained by inheritance, or with little or no trouble. We well know that some of the Roman nobles, who obtained their immense wealth chiefly by the | easy mode of plunder, sometimes gave the most enormous prices for fancied luxuries. A feather will weigh down a scale when there is nothing in the opposite one. But where the amount of the incomes of a country depend, in a considerable degree, upon the exertion of labour, activity and attention, there must be something in the commodities to be obtained sufficiently desirable to balance this exertion, or the exertion will cease. And experience amply shews, by the number of persons who daily leave off business, when they might certainly have continued to improve their fortunes, that most men place some limits, however variable, to the quantity of conveniences and luxuries which they will labour for; and that very few indeed would attend a counting-house six or eight hours a day, in order to purchase commodities which have no other merit than the quantity of labour which has been employed upon them.
Still however it is true that, when a great income has once been created in a country, in the shape of a large mass of rents, profits and wages, a considerable resistance will be made to any essential fall in its value.(238) It is a very just remark of Hume,* that when the affairs of a society are brought to this situation; that is, when, by means of foreign trade, it has acquired the tastes necessary to give value to a great quantity of labour not employed upon actual necessaries, it may lose most of this trade, and yet continue great and | powerful, on account of the extraordinary efforts which would be made by the spare capital and ingenuity of the country to refine home manufactures, in order to supply the tastes already formed, and the incomes already created. But if we were to allow that the income of such a nation might, in this way, by possibility be maintained, there is little chance of its increasing; and it is almost certain that it would not have reached the same amount, without the market occasioned by foreign commerce.
Of this I think we shall be convinced, if, in our own country, we look at the quantity of goods which we export chiefly in consequence of our machinery, and consider the nature of the returns obtained for them. In the accounts of the year ended the 5th of January 1818, it appears that the exports of three articles alone in which machinery is used—cottons, woollen and hardware, including steel goods, &c. are valued at above 29 millions. And among the most prominent articles of the imports of the same year, we find coffee, indigo, sugar, tea, silks, tobacco, wines, and cotton-wool, amounting in value all together to above 18 millions out of thirty! Now I would ask how we should have obtained these valuable imports, if the foreign markets for our cottons, woollens, and hardware had not been extended with the use of machinery? And further, where we could have found substitutes at home for such imports, which would have been likely to have produced the same effects, in stimulating the cultivation of the land, the accumulation | of capital, and the increase of population? And when to these considerations we add the fortunes which have been made in these manufactures, the market for which has been continually extending, and continually requiring more capital and more people to be employed in them; and contrast with this state of things the constant necessity of looking out for new modes of employing the same capital and the same people, a portion of which would be thrown out of their old occupations by every new invention;—we must be convinced that the state of this country would have been totally different from what it is, and that it would not certainly have acquired the same income in rents, profits and wages, if the same ingenuity had been exercised in the invention of machinery, without the same extension of the market for the commodities produced.(239)
[If, from the time of Edward I. we had had no foreign commerce, our revenue from the land alone would not have approached to what it is at present, and still less our revenue from trade and manufactures.
Most of the states of Europe, with their actual divisions of landed property, would have been comparatively unpeopled, without the excitements arising from manufactures and extended markets.] 409
In carrying on the late war, we were powerfully assisted by our steam-engines, which enabled us to command a prodigious quantity of foreign produce and foreign labour. But how would their efficacy have been weakened if we could not have exported our cottons, cloths and hardware?(240) |
If the mines of America could be successfully worked by machinery, and the King of Spain’s tax could be increased at will, so as to make the most of this advantage, what a vast revenue might they not be made to afford him! But it is obvious that the effects of such machinery would sink into insignificance, if the market for the precious metals were confined to the adjacent countries, and the principal effect of it was to throw capital and labour out of employment.
In the actual state of things in this country, the population and wealth of Manchester, Glasgow, Leeds, &c. have been greatly increasing; because, on account of the extending demand for their goods, more people have been continually required to work them up; but if a much smaller number of people had been required, on account of a saving of labour from machinery, without an adequate extension of the market, it is obvious that these towns would have been comparatively poor, and thinly peopled. To what extent the spare capital and labour thrown out of employment in one district would have enriched others, it is impossible to say; and on this subject any assertion may be made, as we cannot be set right by an appeal to facts. But I would ask, whether there are any grounds in the slightest degree plausible for saying, that not only the capital spared at any time from these manufactures would be preserved and employed elsewhere; but that it would be employed as profitably, and create as much exchangeable value in other places as it would have done in | Manchester and Glasgow, with an extending market? In short, are there any plausible grounds whatever for stating that, if the twenty millions worth of cottons which we now export, were entirely stopped, either by successful foreign competition or positive prohibitions, we should have no difficulty in finding employment for our capital and labour equally advantageous to individuals in point of profit, and equally enriching to the country with respect to the exchangeable value of its revenue?(241)
Unquestionably any country has the power of consuming all that it produces, however great in quantity; and every man in health has the power of applying his mind and body to productive labour for ten or twelve hours of the day. But these are dry assertions respecting the powers of a country, which do not necessarily involve any practical consequences relating to the increase of wealth. If we could not export our cottons, it is quite certain that, though we might have the power, we should not have the will, to consume them all in kind at home; and the maintenance of our national wealth and revenue would depend entirely upon the circumstance whether the capital thrown out of the cotton trade could be so applied as to produce commodities which would be estimated as highly and consumed as eagerly as the foreign goods before imported.(242) There is no magic in foreign markets. The final demand and consumption must always be at home; and if goods could be produced at home, which would excite people to work as many | hours in the day, would communicate the same enjoyments, and create a consumption of the same value,(243) foreign markets would be useless. We know however from experience, that very few countries are capable of producing commodities of the same efficacy, in this respect, as those which may be obtained by a trade to various climates and soils. Without such a trade, and with a great increase in the power of production, there is no inconsiderable danger that industry, consumption, and exchangeable value would diminish; and this danger would most unquestionably be realized if the cheapness of domestic commodities occasioned by machinery, were to lead to increased saving rather than to increased expenditure.
But it is known that facilities of production have the strongest tendency to open markets, both at home and abroad. In the actual state therefore of most countries, there is little reason to apprehend any permanent evil from the introduction of machinery. The presumption always is, that it will lead to a great extension of wealth and value. But still we must allow that the pre-eminent advantages derived from the substitution of machinery for manual labour, depend upon the extension of the market for the commodities produced, and the increased stimulus given to consumption; and that, without this extension of market and increase of consumption, they must be in a great degree lost. Like the fertility of land, the invention of good machinery confers a prodigious power of production. But neither of these great powers | can be called fully into action, if the situation and circumstances, or the habits and tastes of the society prevent the opening of a sufficient market, and an adequate increase of consumption.
The three great causes most favourable to production are, accumulation of capital, fertility of soil, and inventions to save labour. They all act in the same direction; and as they all tend to facilitate supply, without reference to demand, it is not probable that they should either separately or conjointly afford an adequate stimulus to the continued increase of wealth, which can only be kept up by a continued increase of the demand for commodities.
But in withdrawing capital &c.It is true that in withdrawing capital from one employment to place it [in]2 another, there is generally a considerable loss; but in the case supposed, it can never be equal to the advantage resulting from the discovery of the machine. The individual may suffer but the community benefits.3
It is true that if the whole capital of the country were valued either in money or in labour it would be worth less after the improvement than before, but because the capital1 estimated at the current price of labour, is of less value, we must not therefore infer, with Mr. Malthus, that it will really employ less labour. The power of employing labour does not depend upon the value of the capital, but depends specifically upon the annual quantity of produce which it will yield. I cannot therefore agree with Mr. Malthus that “Though it might yield a greater produce, it would not command the same quantity of labour as before; and unless more menial servants were used many persons would be thrown out of work; and thus the power of the whole capital to command the same quantity of labour would evidently depend upon the contingency of the vacant capitals being withdrawn undiminished from their old occupations, and finding immediately equivalent employment in others.” I understand Mr. Malthus to say this, suppose I had £20000 in a cotton manufactory and that cotton goods were furnished so cheap by improved machinery that I should think it expedient to quit the trade, there would not be so much labour as before employed, unless I could sell all my property in the cotton mill, and realize my £20000 in money, and then find an equivalent employment for it in some other concern.
Of this £20000—£10000 might consist of machinery, and which it is possible might be utterly useless in any other occupation. It would therefore not be practicable to withdraw more than £10,000. The question it must be remembered is not whether as great a value can be withdrawn, but whether as great a quantity of labour can be employed with the diminished capital. Now it is evident that in that particular trade, the whole quantity of labour employed, was not in proportion to the £20000, but to the £10000. No more labour could be employed than the £10000 could pay for, there is no occasion that any less shall2 be employed after the discovery of the improved machinery. I admit indeed that a profit will be obtained only on £10000, instead of on £20000, by the individual who is obliged to remove his capital, but the question is whether any less quantity of labour will be employed, and whether the community will not be benefited in a greater degree than this individual loses, and on this point I have no need to use any further arguments to satisfy Mr. Malthus for he admits it,—he acknowledges that the whole capital would yield a greater produce. Now this is the point in which society is chiefly interested, it is desirable that the actual means of enjoyment should be increased, and that in the distribution of those enjoyments a smaller quantity should not fall to the share of the most numerous class of the people. We have seen that the same money capital will be employed in the support of labour, and as the people are not supposed to have increased or diminished, they will have the same money wages.
But commodities will altogether be in greater abundance and cheaper, consequently each man’s wages will procure him greater enjoyments. I have purposely made my case appear as unfavorable to myself as possible, by supposing that the £10000 in fixed capital, and which under the new circumstances was no longer applicable to the cotton trade, would have no value whatever. If, as it is probable, it could be made useful in any other manufacture, it would still further tend to increase the quantity of produce which would be still more favorable to consumers.
Unless with labour of the value1 of £10000 as much cotton goods could be made as were before made with labour of the value of £10000 and fixed capital of the value of £10000, cotton goods could not so fall as to make it expedient to abandon the £10000 fixed capital as totally worthless, for if the price of the cotton goods was enhanced on account of the use of the former machinery £1500—the goods must fall £1500 before it can be the manufacturers interest to abandon it. When that happens he will only get 15 p.c. profit on one of his capitals, which by the supposition he can get by the employment of his £10,000 in any other trade.
Mr. Malthus says “If in order to try the principle we were to push it farther, and to suppose that without any extension of the foreign market for our goods, we could by means of machinery obtain all the commodities at present in use, with one third of the labour now applied, is it in any degree probable that the mass of vacant capitals could be advantageously employed, or that the mass of labourers thrown out of work could find the means of commanding an adequate share of the national produce?”2 I answer, yes: Suppose3 three men employed 10 men each, one in the production of shoes, another in the manufacture of stockings, and the other in the manufacture of cloth, all which commodities were required and consumed in the society. Suppose now that each discovers an improved process, by which they can each produce the same quantity of their respective commodities with the labour of five men, will they not, having each the means of employing the labour of ten men, continue to employ the other five; not indeed in the production of cloth, shoes, and stockings, but in the production of some out of the numerous commodities which are useful and desirable to man. Would they not obtain, having it in their power so to do, hats, wine, beer, furniture or any other commodities for which they might have a greater inclination?—Mr. Malthus error appears to me to be in thinking that nothing could be done without the extension of foreign trade. Are we all satiated with our own productions? Would none of us like more and better clothes, an increase of furniture, more carriages and horses, and better and more commodious houses? While we have not too much of these things no facility of production can ever be indifferent to us. “The peasant who might be induced to labour an additional number of hours for tea or tobacco might prefer indolence to a new coat.” In the case supposed no one would be called on to labour an additional number of hours; he might have the tobacco or tea, and his new coat without it and if he had nothing more his master would have. To secure him employment it is only necessary that his master should have the wants, which Mr. Malthus thinks it so difficult to create in the labourer1 .
“The trader or merchant, who would continue in his business in order to be able to drink and give his guests claret and champagne, might think an addition of homely commodities by no means worth the trouble of so much constant attention”! He would quit it then, and live on the interest of his funds, which would, nevertheless, be as productively employed, and with as much ardor by his successor, who had not yet obtained a sufficient portion of homely commodities.
“Where the amount of the incomes of a country depend in a considerable degree, upon the exertion of labour, activity and attention, there must be something in the commodities to be obtained sufficiently desirable to balance this exertion, or the exertion will cease.” This is no doubt true, but there are hundreds, and thousands, in such a country as this, who under any degree of improvement that can be contemplated as probable2 would be happy to furnish the activity and attention necessary to obtain commodities, which to them must be sufficiently desirable, with the funds of others, if entrusted to them for that purpose; even if it should be supposed, which I am far from believing, that the objects are not sufficiently desirable to stimulate the exertions of the proprietors themselves. “Very few indeed would attend a counting house six or eight hours a day, in order to purchase commodities which have no other merit than the quantity of labour which have been employed upon them.”
I should not particularly admire the wisdom of such persons, but nothing is more common. From what circumstance is it that gold plate, jewellery, and lace derive their great value but from the quantity of labour that has been employed on them? and yet there are those who think no toil too great to obtain them.
237p. 405. Mr. Malthus argument is a little contradictory here. You could not find employment for your labourers he says with the capitals disengaged in consequence of the employment of machinery. I expected then that he would have expatiated on the miserable condition of this class and would have opposed the unlimited use of3 machinery on that ground; quite the contrary. The condition of the labourer which we are called upon to commiserate is of a different description; he will be balancing in his mind whether in addition to tea and tobacco he shall prefer4 a new coat to indolence. The small tenant will not know on what to spend his surplus produce,—and the care of the merchant or trader will be whether he can find any market abroad in which he can exchange our home commodities for claret and champagne, for his situation will be so prosperous that nothing less than those refined beverages can stimulate him to continue his usual exertions. If these are all the sufferings that will be entailed upon us from a want of demand for home commodities, I am prepared to meet them, and care not how soon they begin.
Still however it is trueIn what sense is the word value used here?
And when to these considerations &c.This is merely asserting that considerable advantages have been obtained by the extension of the market for the commodities which we have been enabled to produce with considerable facility by the invention and use of machinery, and by the great ingenuity of our people. No remark can be more just, and excepting by Mr. Spence, and a few of his way of thinking, I have never known these advantages to be denied.1 I at any rate shall not be suspected of undervaluing the benefits of a free trade. Commerce is an interchange of conveniences and luxuries. In proportion as the market is extended, the people of every country are enabled to make the best division of their labour, and the most advantageous use of their exertions. Not only does it enable them to procure better and cheaper commodities, which, if there be no other means of getting, they can make themselves, but it furnishes them with the means of getting other commodities, which but for foreign commerce they would never get at all; their climate being unfitted to their production.
The advantages which we have derived from foreign trade then are fully admitted. Improvements in Machinery, with an extensive market abroad, will be much more beneficial to us than improvements without these advantages, for it enables us to devote our time and attention2 exclusively to the manufacture of a commodity in the making of which we possess superior skill. This is however not the subject in dispute. What we want to know is whether improvements can3 be otherwise than beneficial to us under any circumstances? Mr. Malthus’s argument is that they can.
In carrying on the late war &c. &c.The advantages from steam engines &c. are in this instance I think exaggerated by Mr. Malthus. The introduction of these cheaper means of manufacturing commodities lowered their price, and consequently we were obliged to give more of them to foreign countries in exchange for a given quantity of their commodities. The advantages then to foreign countries, from our improvements, are, after a very short interval, as great, as those which we derive from them ourselves. They are a common benefit to all the consumers of the commodities who are admitted to buy them.
Supposing that a country discovered very improved machinery by the means of which she manufactured a commodity which was made wholly for the foreign market, and none was consumed at home,—in that case the whole advantage of the improvement would be obtained by the foreign country, and none whatever by the country which used and invented the improved machinery—excepting indeed this advantage, that in the distribution of employments, none perhaps enabled her to employ her industry with better effect, as a means of obtaining the foreign commodities which she was desirous of purchasing.
This conclusion cannot I think be denied by those who agree with me that the prices of commodities sink at home, and consequently abroad, in proportion to the facility of producing them.
It is singular that Mr. Malthus who estimates so justly at its value the benefit resulting from the extension of the market, should so much underrate the advantages which would be derived from a free trade in corn. Extension of the market, and free trade, are two names for the same thing, for what can give a greater extension to the market for our cotton goods, cloth, and hardware, than the admitting freely the commodity with which foreign countries can most conveniently purchase them?
But I would ask, whether there areI am one who think that the capital would have been employed elsewhere, and employed at the same rate of profits too, and yet I have no doubt that if the export of cotton goods was stopped, and we were obliged to employ the capital absorbed by that trade elsewhere, we should be great sufferers by such an arrangement.
The rate of profits does not depend on foreign trade, but on the returns for labour on the land last cultivated at home, and the distribution of the produce. Suppose these to continue unaltered, and nothing in the change from foreign to home trade can alter them, profits would continue at the same rate. If before with a capital of £20000 I obtained £2000 pr. Ann. profit I should continue to obtain the same, but with my £2000 I should not be able to command the same quantity of foreign and home made commodities. The whole revenue of the country would be of the same money value, and I should say of the same real value, but as that value would be represented by fewer commodities many of them being enhanced in price there would be fewer enjoyments to be purchased with the same real revenue.
Mr. Malthus and I do not substantially differ on this subject. He thinks that less money profits would be made, commodities remaining at the same price—I think the same money gain would be made but commodities would be enhanced in price.
Our seeming1 difference proceeds from the different medium in which we estimate value.
UnquestionablyIt requires an exertion of some magnitude to apply one’s body and mind to productive labour for ten or twelve hours of the day, but no exertion at all to consume what one has before been at the pains of producing. The one gives pain, the other pleasure. How can things so dissimilar be considered as alike?
We should not2 perhaps have the wish to consume all our cotton goods in the case supposed, but the labour which produces them might produce other things which we might be disposed to consume.
And create a consumption of the same “value.”The happiness of a country depends on the quantity of the things which it has to enjoy and not on the “value” of those commodities.
After all it is difficult to understand what Mr. Malthus would wish respecting the use of machinery. The world may be considered as a large country—So considered Mr. Malthus has no objection to the most extensive use of machinery, and in this I agree with him. Where we appear to differ is in this—I am persuaded that a people living in the most limited district, which by some accident might never have had nor should ever in future have, any commerce with foreign countries, would nevertheless derive unmixed advantages from “accumulation of capital, improved fertility of soil, and inventions to save labour[”]3 —Mr. Malthus thinks that in many cases these would be disastrous presents to them, they must be accompanied, according to him by demand to make them beneficial. Now as I think that demand depends only on supply, the means of obtaining abundance of commodities can never I think4 be otherwise than beneficial.
Of the Necessity of a Union of the Powers of Production with the Means of Distribution, in order to ensure a continued Increase of Wealth
We have seen that the powers of production, to whatever extent they may exist, are not alone sufficient to secure the creation of a proportionate degree of wealth. Something else seems to be necessary in order to call these powers fully into action; and this is, such a distribution of produce, and such an adaptation of this produce to the wants of those who are to consume it, as constantly to increase the exchangeable value of the whole mass.(244) |
In individual cases, the power of producing particular commodities is called into action, in proportion to the effective demand for them; and the greatest stimulus to their production is a high market price, or an increase of their exchangeable value, before more capital and labour have been employed upon them.
In the same manner, the greatest stimulus to the continued production of commodities, taken all together, is an increase in the exchangeable value of the whole mass, before more labour and capital have been employed upon them.(245) And this increase of value is effected by such a distribution of the actual produce as is best adapted to gratify the existing wants of society, and to inspire new ones.
It has been stated in a preceding section, that if all the roads and canals of the country were broken up, and the means of distributing its produce were essentially impeded, the whole value of the produce would greatly fall; indeed, it is obvious that if it were so distributed as not to be suited to the wants, tastes, and powers of the actual population in different situations, its value might sink to such a degree as to be comparatively quite inconsiderable. Upon the same principle, if the means of distributing the produce of the country were still further facilitated, and if the adaptation of it to the wants, tastes and powers of the consumers were more complete than at present, there can be no doubt that a great increase in the value of the whole produce would follow.
But to illustrate the power of distribution in in-|creasing the mass of exchangeable value, we need only refer to experience. Before the introduction of good roads and canals in England, the prices of produce in many country districts were extremely low compared with the same kind of produce in the London markets. After the means of distribution were facilitated, the price of country produce, and of some sorts of London produce which were sent into the country in exchange for it, rose; and rose in a greater degree than the country produce fell in the London markets, or the London produce fell in the country markets; and consequently the value of the whole produce, or the supplies of London and the country together, was greatly increased; and while encouragement was thus given to the employment of a greater quantity of capital by the extension of demand, the temporary rise of profits, occasioned by this extension, would greatly contribute to furnish the additional capital required.(246)
It will be asked, perhaps, how an increase in the exchangeable value of the whole produce of a country is to be estimated? It has before been stated that real value in exchange, from its very nature, admits of no accurate and standard measure; and consequently, in the present case, no measure can be mentioned which is perfectly satisfactory. Yet even bullion, our most common measure of value, might, in general, and for short periods, be referred to; and though abstractedly considered, wealth is nearly independent of money; yet in the actual state of the relations of the dif-|ferent countries of the world with each other, it rarely happens that any great increase or decrease in the bullion value of all the commodities of a country takes place, without an increase or decrease of demand for commodities, compared with the supply of them.
It happens however, undoubtedly, sometimes, that the value of bullion alters, not only generally, but in particular countries; and it is not meant to be said that a country cannot possibly be stimulated to an increase of wealth after a fall has taken place in the money-price of all its commodities. As the best approximation to a measure of real value in exchange, in application to the commodities of different countries and different times, I before proposed a mean between corn and labour;* and to this measure I should be disposed always to refer, when any commodities are to be estimated, with the exception of corn and labour themselves. But as, in speaking of national wealth, it is necessary to include the exchangeable value of food; and as food cannot well be the measure of food, I shall refer generally to the labour, domestic and foreign, which the bullion-price of the produce will command, or the sacrifices which people are willing and able to make of their own or other persons exertions in order to obtain it, as the best practical measure of value that can be applied; and though undoubtedly not accurate, yet sufficiently so for the present purpose. |
General wealth, like particular portions of it, will always follow effective demand. Whenever there is a great demand for commodities, that is, whenever the exchangeable value of the whole mass will command more labour than usual at the same price, there is the same kind of reason for expecting a general increase of commodities, as there is for expecting an increase of particular commodities when their market-prices rise. And on the other hand, whenever the produce of a country estimated in the labour which it will command falls in value, it is evident that with it the power and will to purchase the same quantity of labour must be diminished, and the effective demand for an increase of produce must, for a time, be checked.(247)
Mr. Ricardo, in his chapter on Value and Riches, has stated that “a certain quantity of clothes and provisions will maintain and employ the same number of men, and will therefore procure the same quantity of work to be done, whether they be produced by the labour of a hundred or of two hundred men; but they will be of twice the value, if two hundred have been employed in their production.”* But, even taking his own peculiar estimate of value, this statement would very rarely indeed be true. The clothes and provisions which had cost only one hundred days’ labour would never, but in the most unnatural state of things, be able to procure the same quantity of work to | be done as if they had cost two hundred days’ labour.(248) To suppose it, is to suppose that the price of labour, estimated in necessaries, is the same at all times and in all countries, and does not depend upon the plenty or scarcity of necessaries compared with labour, a supposition contradicted by universal experience. Nine quarters of wheat will perhaps command a year’s labour in England; but sixteen quarters will hardly procure the same quantity of work to be done in America. And in the case either of a sudden increase of productive labour, by a rapid conversion of revenue into capital, or a sudden increase of the productiveness of the same quantity of labour, there is not the slightest doubt that a given portion of necessaries would be quite unable to set in motion the same quantity of labour; and, if the exchangeable value of the produce should fall in a greater ratio than its quantity increases, (which may very easily happen,) then the same quantity of labour would not be set in motion by the increased quantity of necessaries, and the progress of wealth would receive a decided check.(249)
Such a check would still more obviously be the consequence of a diminished demand for produce, owing to the decline of foreign commerce, or any other cause. Under these circumstances, both the quantity and value of produce would soon be diminished; and though labour, from the want of demand, would be very cheap, the capitalists would soon lose both the will and the power to employ it in the same quantity as before.(250) |
In every case, a continued increase in the value of produce estimated in labour seems to be absolutely necessary to a continued and unchecked increase of wealth; because without such an increase of value it is obvious that no fresh labour can be set in motion.(251) And in order to support this value it is necessary that an effective distribution of the produce should take place, and a due proportion be maintained between the objects to be consumed and the number, wants, and powers of the consumers, or, in other words, between the supply of commodities and the demand for them.
It has already been shewn that this value cannot be maintained in the case of a rapid accumulation of capital occasioned by an actual and continued diminution in the expenditure and consumption of the higher classes of society.* Yet it will be most readily allowed that the saving from revenue to add to capital is an absolutely necessary step in the progress of wealth. How then is this saving to take place without producing the diminution of value apprehended?
It may take place, and practically almost always does take place, in consequence of a previous increase of value, or of revenue, in which case a saving may be effected, not only without any diminution of demand and consumption, but under an actual increase of demand, consumption and value during every part of the process.(252) And it is in fact this previous increase of value and revenue | which both gives the great stimulus to accumulation, and makes that accumulation effective in the continued production of wealth.
[M. Sismondi limits the value of the produce of any year to the value of the revenue of the preceding year; but this would preclude increase of value. A great increase of exchangeable value and demand may take place in any one year by a better distribution of produce, and a better adaptation of it to the wants of the society.]
The fortune of a country, though necessarily made more slowly, is made in the same way as the fortunes of individuals in trade are generally made,—by savings, certainly; but by savings which are furnished from increased gains, and by no means involve a diminished expenditure on objects of luxury and enjoyment.(253)
Many a merchant has made a large fortune although, during the acquisition of this fortune, there was perhaps hardly a single year in which he did not rather increase than diminish his expenditure in objects of luxury, enjoyment, and liberality.(254) The amount of capital in this country is immense, and it certainly received very great additions during the last twenty-five years; but on looking back, few traces are to be found of a diminished expenditure in the maintenance of | unproductive labour. If some such traces however are to be found, they will be found in exact conformity to the theory here laid down; they will be found during a period, when, from particular circumstances, the value of the national produce was not maintained, and there was in consequence a great diminution of the power of expenditure, and a great check to the production of wealth.
Perhaps it will be said, that to lay so much stress on distribution, and to measure demand by the exchangeable value of the whole produce, is to exalt the gross revenue at the expense of the neat revenue of a country, and to favour that system of cultivation and manufacturing which employs on each object the greatest number of hands.(255) But I have already shewn that the saving of labour, and the increase of skill, both in agriculture and manufacturing industry, by enabling a country to push its cultivation over poorer lands, without diminution of profits, and to extend far and wide the markets for its manufactures, must tend to increase the exchangeable value of the whole; and there cannot be a doubt that in this country they must have been the main sources of that rapid and astonishing increase in the value of the national wealth, which has taken place during the last thirty or forty years.
To dwell therefore mainly on the gross revenue of a country rather than on its neat revenue is in no respect to under-rate the prodigious advantage derived from skill and machinery, but merely to give that importance to the value of the whole produce | to which it is so justly entitled. No description of national wealth, which refers only to neat revenue, can ever be in any degree satisfactory. The Economists destroyed the practical utility of their works by referring exclusively to the neat produce of the land. And the writers who make wealth consist of rents and profits, to the exclusion of wages, commit an error exactly of the same kind though less in degree. Those who live upon the wages of labour, unproductive as well as productive, receive and expend much the greatest part of the annual produce, pay a very considerable sum in taxes for the maintenance of the government, and form by far the largest portion of its physical force. Under the prevalence of habits of prudence, the whole of this vast mass might be nearly as happy as the individuals of the other two classes, and probably a greater number of them, though not a greater proportion of them, happier. In every point of view therefore, both in reference to the part of the annual produce which falls to their share, and the means of health and happiness which it may be presumed to communicate, those who live on the wages of labour must be considered as the most important portion of the society; and any definition of wealth which should involve such a diminution of their numbers, as to require for the supply of the whole population a smaller annual produce, must necessarily be erroneous.
In the First Chapter of this Work, having defined wealth to be “the material objects which are ne-|cessary, useful, and agreeable to mankind,” I stated as a consequence that a country was rich or poor according to the abundance or scantiness in which these objects were supplied, compared with the extent of territory. It will be readily allowed that this definition does not include the question of what may be called the amount of disposable produce, or the fund for taxation; but still I must consider it as a much more correct definition of the wealth of a country than any that should refer to this disposable part alone. What should we say of the wealth of this country, if it were possible that its rents and profits could remain the same, while its population and produce were reduced two-thirds? Certainly it would be much poorer according to the above definition; and there are not many that would dissent from such a conclusion.
That it would be desirable, in a definition of national wealth, to include the consideration of disposable produce, as well as of actual quantity and value, cannot be doubted; but such a definition seems to be in its nature impossible, because in each individual case it must depend upon opinion, what increase of disposable produce should be accounted equivalent to a given diminution of gross produce.
We must content ourselves therefore with referring generally to the amount and value of national produce; and it may be subsequently stated as a separate, though very important consideration, that particular countries, with the same amount and | value of produce, have a larger or smaller proportion of that produce disposable. In this respect, no doubt, a country with a fertile territory will have a prodigious advantage over those whose wealth depends almost entirely on manufactures. With the same population, the same rate of profits, and the same amount and value of produce, the landed nation would have much the largest portion of its wealth disposable.(256)
Fortunately, it happens but seldom that we have to determine the amount of advantage or disadvantage occasioned by the increase of the neat, at the expense of the gross revenue. The interest of individual capitalists uniformly prompts them to the saving of labour, in whatever business they are engaged; and both theory and experience combine to shew that their successful efforts in this direction, by increasing the powers of production, afford the means of increasing, in the greatest practicable degree, the amount and value of the gross produce,* provided always that such a dis-|tribution and consumption of the increased supply of commodities takes place as constantly to increase their exchangeable value.
In general, an increase of produce and an increase of value go on together;(258) and this is that natural and healthy state of things, which is most favourable to the progress of wealth. An increase in the quantity of produce depends chiefly upon the power of production, and an increase in the value of produce upon its distribution. Production and distribution are the two grand elements of wealth, which, combined in their due proportions, are capable of carrying the riches and population of the earth in no great length of time to the utmost limits of its possible resources; but which taken separately, or combined in undue proportions, produce only, after the lapse of many thousand years, the scanty riches and scanty population, which are at present scattered over the face of the globe.
We have seen that the powers ofTrue; a faulty distribution would have these effects, but what security can you have against it better than that of allowing every1 man to produce what he pleases, and to consume the commodity he produces himself, or to exchange it for the produce of other men’s labour. His power of demanding commodities must depend on the ability with which he selects the objects he produces.
In the same mannerWhat is meant by “an increase in the exchangeable value of the whole mass of commodities, before more labour and capital have been employed upon them”? If it be meant that they are more valuable as compared with labour it is a roundabout way of saying, that labour has fallen in value2 . As Mr. Malthus measures the value of labour by the quantity of commodities earned by the labourer,1 whenever from any cause more commodities are given for labour, labour may be said to rise, and whenever fewer commodities are given labour may be said to fall.
After the means of distributionIn the case supposed of a free intercourse between London and the Country—I should say it would be followed by a fall in the value of labour. If corn could be with greater facility conveyed from the country to London its value would fall in London, and as corn is a regulator of the price of labour, would probably fall also, and profits would rise. But why does corn fall in London? because a less quantity of labour is necessary from first to last to grow it and take it there.
The facility of intercourse would lower country produce in London, and London produce in the country, but country produce would neither rise nor fall2 in the country, neither would London produce in London. Their prices in the places in which they were produced and indeed in all other places would be regulated by their cost of production.*
Whenever there is a great demand for commodities, that is, whenever the exchangeable value of the whole mass will command more labour than usual at the same price, there is the same kind of reason for expecting a general increase of commodities, as there is for expecting an increase of particular commodities when their market-prices rise.Mr. Malthus, it will be observed, loses no occasion of insisting on the importance of demand, in stimulating countries to exertions, and is always fearful of a deficiency of this invigorating force. It is desirable then to ascertain correctly what meaning he attaches to the word “demand.” Here we are told that a great demand for commodities means that the exchangeable value of the mass shall command more labour than usual at the same price.
Suppose I have hats, shoes, stockings &c. of the value of £1000, and labour to be worth 2/ a day, the mass of my commodities will be worth ten thousand days labour. If labour fell to 1/8 a day my commodities would still sell for £1000, but they would command twelve thousand days labour.—According to Mr. Malthus then the demand for my commodities would have increased, and this increased demand would as surely lead to an increased production, as an increased market price of a particular commodity would lead to the increased production of that commodity. Instead of calling this an increased demand, and instead of saying that commodities had increased in value, because they would command more labour, merely perhaps because there was a redundant population, for nothing else can make a low commodity price of labour1 if I may be allowed the expression, I should say that commodities remained at the same value and labour had fallen in value, and that in consequence of the fall of labour profits had risen. The demand for commodities would neither be greater nor less, but the masters would have the right to consume more, and the men less. These high profits, might, or might not, lead to further productions, accordingly as the masters accumulated, or spent their increased incomes. When profits are universally high, the temptation to produce an increased quantity of commodities is very different from that which a high market price of a particular commodity affords, for the production of that particular commodity.
In the latter case, the high profits can only be obtained by producing that one commodity, in the other high profits are enjoyed by all. It would be a mistake too to suppose that because the commodities estimated in labour were now worth 12,000 days labour instead of 10,000, that therefore men who could execute 12,000 days labour would1 be employed —this would be true if all that the masters had and all they2 saved, was employed productively, but that by no means follows. If a friend in Portugal were to give me a pipe of port worth one thousand days labour, the commodities of the country would be worth 1000 days labour more than before but if I drank the wine with my family not one additional man would be employed.3 I never wish to see “the exchangeable value of the mass of commodities command more labour than usual at the same price,” for great as I estimate the benefits resulting from high profits I never wish to see those profits increased at the expence of the labouring class. I am sure that Mr. Malthus has the same feeling as myself on this subject, and does not perceive that this is the condition annexed to the increased value of the mass of commodities without an increase of their quantity.4 What we should desire is to increase the quantity of commodities without increasing their value.5 The mass of commodities may then be of the same money value as before, and if labour falls from 2/-, to 1/8, pr. day, the labourer may be better off, as with 1/8 he may get more than he got with 2/- before. The rate of profits will be increased in the same way as before, but it will not be at the expence of the labouring class,—it will follow only from the increased productiveness of labour.
The clothes and provisions which had costI know it, and am rejoiced at it. If they could, all the advantage would go to profits. It is highly desirable that a part should go to increase the enjoyments of the labourer.
And in the case either of a suddenI am a farmer and produce 100 qrs. of corn of which I give 50 to my labourers. I improve the productiveness of my land without employing more labour, and get 120 qrs., and I now give 55 to my labourers. The hatter, the clothier, the shoemaker make the same improvements in their trades, and divide the produce they obtain in the same proportions, between themselves and their labourers. Is not the society enriched? Is it not better off than before? Call value what you please, talk of the rising or falling of commodities, must not the state of the society be improved?
Mr. Malthus says1 that “By a sudden increase of the productiveness of the same quantity of labour, there is not the slightest doubt that a given portion of necessaries would be quite unable to set in motion the same quantity of labour.” To whom will the produce belong? To the masters, or to the workmen. If to the former, they have the power of commanding more labour. If to the latter, although the same quantity of labour should not be employed, the labourers would be in affluence, and with the diminished quantity of labour the masters would be as well off as before. In this case does Mr. Malthus speak of it as an evil that2 a given portion of necessaries would be quite unable to set in motion the same quantity of labour? It is most desirable that it should not.
Such a decidedHow erroneous this conclusion appears to me!
In every caseI fear I am wearying the reader by so long dwelling on this subject, but Mr. Malthus’ assertion here must mean this. If a country doubles its productions of all kinds it will not be more wealthy unless it can command more labour. I should say its profits might be no higher in value3 but they would command double the quantity of enjoyments, it would be doubly rich.
Mr. Malthus agrees that wealth and value are not the same thing, and yet he here asserts “that a continued increase in the value of produce seems to be absolutely necessary to a continued and unchecked increase of wealth.” Will not the wealth of a country increase if without any more labour you contrive to double the quantity of commodities?4
It may take placeThis is one way undoubtedly.
The fortune of a countryIt will however be allowed that an individual may improve his fortune by a diminished expenditure on objects of luxury and enjoyment. Why may not a country do the same?
Many a merchant has made aTrue, but a brother merchant who avoided an increased expenditure on objects of luxury, enjoyment and liberality with the same profits, would get rich faster than him.
Perhaps, it will be saidHere again demand is measured by the exchangeable value of commodities. Exchangeable value in what? In labour? Suppose you were to add 20 p.c. in quantity1 to all the goods of the country and were by better wages to enable the labouring class to command all these additional commodities, would you not have increased the value of commodities because the greater quantity will only command the same labour as before? Will there be no increased demand because they can command no more labour, altho’ every labourer will have the power and will to demand and consume an additional quantity of commodities. “It is not the interest of the producer to furnish commodities on such terms”, that is no answer, they are furnished. We do not deny that there is no motive in the capitalist to produce commodities which will not command more labour than has been bestowed on their production, but if he acts contrary to this interest, how does he injure his country? Why doubt the demand and consumption of the commodities produced? Why is it necessary to recommend to this individual not to go on producing? Will not his own interest tell him that he is producing for another to consume? And above all how is taxation to relieve him? Because he has no profits on a part of his capital, something is to be taken from him, or from the labourer he employs. What relief that should afford him I cannot divine.
In this respect no doubt a countryMr. Malthus says that an agricultural country “with the same population, the same rate of profits, and the same amount and value of produce as a manufacturing country, would have much the largest proportion of its wealth disposable.” I ask how they could have the same population, the same rate of profits, and the same amount and value of produce? The amount of the value and produce in the manufacturing country is to be divided between wages and profits—in the agricultural between rent, wages, and profits. If out of an equal value you give the same value to wages and profits in each, what remains for rent in the Agricultural country?
From what has been here saidMr. Malthus says “the additional two millions of men would some of them unquestionably have a part of their wages disposable.” Then they would have a part of the neat revenue. I do not deny that wages may be such as to give to the labourers a part of the neat revenue—I limited my proposition to the case when wages were too low to afford him any surplus beyond absolute1 necessaries. Mr. Malthus has not quoted me correctly. I said,2 “If five millions of men could produce as much food and clothing as was necessary for ten millions, food and clothing for five millions would be the net revenue. Would it be of any advantage to the country, that to produce this same net revenue seven millions of men should be required, that is to say that seven millions should be employed to produce food and clothing for twelve millions? The food and clothing for five millions would be still the net revenue. The employing a greater number of men would enable us neither to add a man to our army and navy, nor to contribute one guinea more in taxes.”
“It is not on the grounds of any supposed advantage from a large population or of the happiness that may be enjoyed by a greater number of human beings that Adam Smith supports the preference of that employment of capital, which gives motion to the greatest quantity of industry; but expressly on the ground of its increasing the power of the country” &c. &c.
Mr. Malthus supposes 7 millions not to be required—that is changing my proposition not refuting it.1 M. Say has also remarked on this passage,2 and although I had carefully guarded myself, by the observation, that I was only answering Adam Smith’s argument respecting the power of paying taxes &c., and was not considering what was undoubtedly on any other occasion most worthy of consideration3 the happiness of so many human beings, yet4 he speaks as if this consideration was wholly unimportant in my estimation. I assure him that he has done me injustice—it was not one moment absent from my mind, nor did I fail to regard it with its due weight.
In general, an increase of produce &c.It very seldom happens otherwise, all savings made from expenditure and added to capital increase the amount of commodities and at the same time add to the power of commanding labour Mr. Malthus criterion of increased value.5 It is barely possible that accumulation might be made so rapidly that the supply of labour should not keep pace with it. In that case the mass of commodities might not command more labour.
Of the Distribution occasioned by the Division of Landed Property considered as the means of increasing the Exchangeable Value of the whole Produce
[The three causes most favourable to distribution are, the division of landed property; internal and external commerce; and the maintenance of unproductive consumers.
In the first settlement of new colonies, an easy subdivision of the land is necessary to give effect to the principle of population.]
The rapid increase of the United States of America, taken as a whole, has undoubtedly been aided very greatly by foreign commerce, and particularly by the power of selling raw produce, obtained with little labour, for European commodities which have cost much labour.(259)
[The rapid increase of the establishments in North America depended greatly upon the facility of settling new families on the land as they branched off from their parent stocks.
The vicious distribution of landed property almost all over Europe, derived from the feudal times, was the main cause which impeded the progress of cultivators and wealth in the middle ages.]
Adam Smith has well described the slack kind of cultivation which was likely to take place, and did in fact take place, among the great proprietors of the middle ages. But not only were they bad cultivators and improvers; and for a time perhaps deficient in a proper taste for manufactured products; yet, even if they had possessed these tastes in the degree found to prevail at present, their inconsiderable numbers would have prevented their demand from producing any important mass of such wealth. We hear of great splendour among princes and nobles in every period of history. The difficulty was not so much to inspire the rich with a love of finery, as to break down their immense properties, and to create a greater number of demanders who were able and willing to purchase the results of productive labour.(260) This, it is obvious, could only be effected very gradually. | That the increasing love of finery might have assisted considerably in accomplishing this object is highly probable; but these tastes alone, unaccompanied by a better distribution of property, would have been quite inefficient. The possessor of numerous estates, after he had furnished his mansion or castle splendidly, and provided himself with handsome clothes and handsome carriages, would not change them all every two months, merely because he had the power of doing it. Instead of indulging in such useless and troublesome changes, he would be more likely to keep a number of servants and idle dependants, to take lower rents with a view of having a greater command over his tenants, and perhaps to sacrifice the produce of a considerable portion of his land in order to encourage more game, and to indulge, with more effect and less interruption, in the pleasures of the chase. Thirty or forty proprietors, with incomes answering to between one thousand and five thousand a year, would create a much more effective demand for wheaten bread, good meat, and manufactured products, than a single proprietor possessing a hundred thousand a year.
[It is physically possible for a small number of very rich proprietors and capitalists to create a very large demand; but practically, it has always been found that the excessive wealth of the few is never equivalent, in effective demand, to the more moderate wealth of the many.
But though it be true that the division of landed property to a certain extent is favourable to the increase of wealth, it is equally true that beyond a certain extent it is unfavourable.
It will be found that all the great results in political economy respecting wealth, depend upon proportions; and this important truth is particularly obvious in the division of landed property.]
On the effects of a great sub-division of property, a fearful experiment is now making in France. The law of succession in that country divides property of all kinds among all the children equally, without right of primogeniture or distinction of sex, and allows but a small portion of it to be disposed of by will.
This law has not yet prevailed long enough to shew what its effects are likely to be on the national wealth and prosperity. If the state of property in France appears at present to be favourable to industry and demand, no inference can thence be drawn that it will be favourable in future. It is universally allowed that a division of property to a certain extent is extremely desirable; and so many traces yet remain almost all over Europe of the vast landed possessions which have descended from the feudal times, that there are not many states in which such a law as that of France might not be of use, with a view to wealth, for a certain number of years. But if such a law were to continue per-|manently to regulate the descent of property in France; if no modes of evading it should be invented, and if its effects should not be weakened by the operation of an extraordinary degree of prudence in marriage, which prudence such a law would certainly tend to discourage, there is every reason to believe that the country, at the end of a century, will be quite as remarkable for its extraordinary poverty and distress, as for its unusual equality of property. The owners of the minute divisions of landed property will be, as they always are, peculiarly without resource, and must perish in great numbers in every scarcity. Scarcely any will be rich but those who receive salaries from the government.(261)
In this state of things, with little or none of the natural influence of property to check at once the power of the crown and the violence of the people, it is not possible to conceive that such a mixed government as France has now established can be maintained. Nor can I think that a state of things, in which there would be so much poverty, could be favourable to the existence and duration of a republic. And when, in addition to this, we consider how extremely difficult it is, under any circumstances, to establish a well-constituted republic, and how dreadfully the chances are against its continuance, as the experience of all history shews; it is not too much to say, that no well-grounded hope could be entertained of the permanent prevalence of such a form of government.(262)
But the state of property above described would be the very soil for a military despotism. If the | government did not adopt the Eastern mode of considering itself as sole territorial proprietor, it might at least take a hint from the Economists, and declare itself co-proprietor with the landlords, and from this source, (which might still be a fertile one, though the landlords, on account of their numbers, might be poor,) together with a few other taxes, the army might easily be made the richest part of the society; and it would then possess an overwhelming influence, which, in such a state of things, nothing could oppose. The despot might now and then be changed, as under the Roman emperors, by the Praetorian guards; but the despotism would certainly rest upon very solid foundations.
[In the British empire, the immense landed possessions which formerly prevailed have been divided by the prosperity of commerce and manufactures.
A large body of middle classes has been formed from commerce, manufactures, professions, &c. who are likely to be more effective demanders than small proprietors of land.
Under these circumstances, it might be rash to conclude that the abolition of the right of primogeniture would increase the wealth of the country; but if we could come to this conclusion, it would not determine the policy of a change.
There is reason to think that the British constitution could not be maintained without an aristocracy; and an effective aristocracy could not be maintained without the right of primogeniture.
It is not easy to say to what extent the abolition of the law of primogeniture would divide the landed property of the country; but the division would probably be unfavourable to good government.
Although therefore a more equal distribution of landed property might be better than that which actually prevails, it might not be wise to abolish the law of primogeniture.
But whatever laws may prevail, the principle will remain true, that the division of landed property is one of the great means of distribution which tends to keep up and increase the exchangeable value of the whole produce.]
The rapid increase of the United StatesIt can be of no consequence to America, whether the commodities she obtains in return for her own, cost Europeans much, or little labour, all she is interested in, is that they shall cost her less labour by purchasing than by manufacturing them herself.
The Difficulty was not so much[What difference could it make whether there was one great demander or a great many small ones? It was not demanders, but producers and accumulators of capital that were wanted. Objects too on which to expend revenue were required.]1
This law has not yet prevailedWhy should this law occasion so great a subdivision of property? Not only prudence in marriage will counteract it, but the acquisition of wealth, made by each member of the family. These acquisitions will probably enable him to leave to his children as large a patrimony as he received from his father. His children in their turn will be again inclined and probably1 enabled to follow their father’s example. Is not this practice actually prevailing in England in all families excepting the Aristocratical. Do not all the merchants, Bankers, manufacturers, farmers, shopkeepers, &c. &c.2 divide their property equally amongst their children, and are any of the ill effects, expected by Mr. Malthus, in the case of France, found to proceed from it?
Because the land may be very much subdivided in consequence of the apportioning it amongst children, it does not follow, either, that it should be separately cultivated by those children, or that each should continue to be the proprietor of his original share of3 it. Sales would be made, and leases would be granted, and as well as a great proprietor now divides his land into separate farms for the convenience, and advantage of better cultivation, so would various small contiguous4 proprietors accumulate their small lots of land into one good farm for the same purpose.
In this state of thingsI cannot participate with Mr. Malthus in his fears for the duration5 of a free Government, under such a system.
Of the Distribution occasioned by Commerce, internal and external, considered as the Means of increasing the exchangeable Value of Produce
The second main cause favourable to that increase of exchangeable value, which depends upon distribution, is internal and external commerce.
[Every exchange which takes place in a country effects a distribution of its commodities better adapted to the wants of the society, and calculated to give a greater market value to the whole produce.]
The Economists, in their endeavours to prove the unproductive nature of trade, always insisted that the effect of it was merely to equalize prices, which were in some places too high and in others too low, but in their amount the same as they would be after the exchange had taken place. This position must be considered as unfounded, and capable of being contradicted by incontrovertible facts. The increase of price at first, from the extension of the market, is unquestionable. And when to this we add the effect occasioned by the demand for further produce, and the means thus afforded of rapid accumulation for the supply of this demand, it is impossible to doubt for a moment the direct tendency of all internal trade to increase the value of the national produce.
If indeed it did not tend to increase the value of the national produce, it would not be carried | on. It is out of this increase that the merchants concerned are paid; and if some London goods are not more valued in Glasgow than in London, and some Glasgow goods more valued in London than in Glasgow, the merchants who exchange the articles in which these towns trade, would neither be doing themselves any good, nor any one else. It is a mere futile process to exchange one set of commodities for another, if the parties, after this new distribution of goods has taken place, are not better off than they were before. The giving one article for another has nothing to do with effectual demand, unless the commodity received so far exceeds in value the labour employed on the commodity parted with, as to yield adequate profits to the capitalists concerned, and to give them both the power and the will to set fresh labour to work in the same trade.(263)
It has been said that the industry of a country is measured by the extent of its capital, and that the manner in which this capital is employed, though it may make some difference to the enjoyment of the inhabitants, makes very little in the value of the national revenue. This would be true on one supposition, and on one supposition only; namely, that the inhabitants could be persuaded to estimate their confined productions just as highly, to be as eager to obtain and consume them, and as willing to work hard for them, and to make great sacrifices for them, as for the commodities which they obtain from a distance. But are we at liberty to make such a supposition? It is specifi-|cally to over-come the want of eagerness to purchase domestic commodities that the merchant exchanges them for others more in request. Could we but so alter the wants and tastes of the people of Glasgow as to make them estimate as highly the profusion of cotton goods which they produce, as any articles which they could receive in return for them under a prosperous trade, we should hear no more of their distresses. It may be allowed that the quantity of productive industry maintained in a country is nearly proportioned to the quantity of capital employed; but the value of the revenue will be greater or less, according to the market prices of the commodities produced. These market prices must obviously depend upon the interchange of goods; and consequently the value of the revenue, and the power and will to increase it, must depend upon that distribution of commodities which best adapts them to the wants and tastes of the society.
The whole produce of a nation may be said to have a market price in money and labour. When this market price is high, that is, when the prices of commodities rise so as to command a greater excess of labour above what they had cost in production than before, while the same capital and number of people had been employed upon them, it is evident that more fresh labour will be set in motion every year, and the increase of wealth will be certain and rapid. On the other hand, when the market prices of commodities are such as to be able to command very little more | labour than the production of them has cost, it is as evident that the national wealth will proceed very slowly, or perhaps be quite stationary.
In the distribution of commodities, the circulating medium of every country bears a most important part; and, as I intimated before in a note, we are much more likely to obscure our reasonings than to render them clearer, by throwing it out of our consideration. It is not easy indeed, without reference to a circulating medium, to ascertain whether the commodities of a country are so distributed as to give them their proper value.(264)
It may be said, perhaps, that if the funds for the maintenance of labour are at any time in unusual abundance, it may fairly be presumed that they will be able to command a more than usual quantity of labour. But they certainly will not be able to command more labour, nor even so much, if the distribution of them be defective; and in a country which has a circulating medium, the specific proof of the distribution being defective is, that the whole produce does not exchange for so large an amount of circulating medium as before, and that consequently the producers have been obliged to sell at a great diminution of money profits, or a positive money loss.
From the harvest of 1815 to the harvest of 1816, there cannot be a doubt that the funds for the maintenance of labour in this country were unusually abundant. Corn was particularly plentiful, and no other necessaries were deficient; yet it is an acknowledged fact, that great numbers were | thrown out of employment, partly from the want of power, and partly from the want of will to employ the same quantity of labour as before. How is this fact to be accounted for? As I have said before, it would not be easy to account for it without referring to a circulating medium; because, without such reference, the proof of a defective distribution would be extremely difficult. But the moment we refer to a circulating medium, the theory of the fact observed becomes perfectly clear. It is acknowledged that there was a fall in the money value of the raw produce, to the amount of nearly one third. But if the farmer sold his produce for only two thirds of the price at which he had before sold it, it is evident that he would be quite unable to command the same quantity of labour, and to employ the same quantity of capital on his farm as he did the year before. (265) And when afterwards a great fall of money price took place in all manufactured products, occasioned in a considerable degree by this previous fall of raw produce, it is as evident that the manufacturers would be unable to command the labour of the same number of workmen as before. In the midst of the plenty of necessaries, these two important classes of society would really have their power of employing labour diminished, while all those who possessed fixed incomes would have their power of employing labour increased, with very little chance of an increase of will to extend their demand in proportion; and the general result would resemble the effects of that partial distribution of products which | would arise from the interruption of accustomed communications. The same, or a greater quantity of commodities might be produced for a short time; but the distribution not being such as to proportion the supply in each quarter to the demand, the whole would fall in exchangeable value, and a very decided check to production would be experienced in reference to the whole country. It follows, that the labouring classes of society may be thrown out of work in the midst of an abundance of necessaries, if these necessaries are not in the hands of those who are at the same time both able and willing to employ an adequate quantity of labour.(266)
It is of no use therefore to make suppositions about a great increase of produce, and, rejecting all reference to a circulating medium, to conclude that this great increase will be properly distributed and effectively consumed. It is a conclusion which we have no right whatever to make. We know, both from theory and experience, that if the whole produce falls in money value, the distribution must be such as to discourage production. As long as this fall in the money price of produce continues to diminish the power of commanding domestic and foreign labour, a great discouragement to production must obviously continue; and if, after labour has adjusted itself to the new level of prices, the permanent distribution of the produce and the permanent tastes and habits of the people should not be favourable to an adequate degree of consumption, the clearest principles of political eco-|nomy shew that the profits of stock might be lower for any length of time than the state of the land rendered necessary;(267) and that the check to production might be as permanent as the faulty distribution of the produce and the unfavourable tastes and habits which had occasioned it.
[Referring to the command over labour as the final measure of the value of the whole produce, its bullion value should be previously referred to, in order to ascertain whether its distribution be such as to enable it to command labour in some proportion to its quantity.
The distribution of commodities, occasioned by internal trade, is the first step towards any considerable increase of wealth and capital.]
The motives which urge individuals to engage | in foreign commerce are precisely the same as those which lead to the inter-change of goods between the more distant parts of the same country, namely, an increase in the market price of the local products; and the increase of profits thus made by the individual, or the prevention of that fall of profits which would have taken place if the capital had been employed at home, must be considered as a proportionate increase in the value of the national produce.(268)
Mr. Ricardo begins his Chapter on Foreign Trade by stating that “No extension of foreign trade will immediately increase the amount of value in a country although it will very powerfully contribute to increase the mass of commodities and therefore the sum of enjoyments.” This statement is quite consistent with his peculiar view of value, as depending solely upon the labour which a commodity has cost. However abundant may be the returns of the merchant, or however greatly they may exceed his exports in value according to the common acceptation of the term, it is certain that the labour employed in procuring these exports will at first remain the same. But, as it is so glaring and undeniable a fact that the returns from an unusually favourable trade will exchange for an unusual quantity of money, labour and domestic commodities; as this increased power of commanding money, labour and commodities is in reality what is meant by the merchant when he talks of the extension of the foreign market and a favourable trade, (269) it appears to me that such | a state of things which may, and often does last a sufficient time to produce the most important results, is alone, and at once, a decisive proof that the view of exchangeable value, which makes it depend exclusively upon the cost of production, is essentially incorrect, and utterly useless in solving the great phenomena which attend the progress of wealth.
Mr. Ricardo seems to think that value cannot increase in one department of produce without diminishing it in some other.* This again may be true according to his view of value, but is utterly unfounded according to that more enlarged view of exchangeable value which is established and confirmed by experience. If any foreign power were to send to a particular merchant commodities of a new description which would sell in the London market for fifty thousand pounds, the wealth of such merchant would be increased to that extent; and who, I would ask, would be the poorer for it? It is no doubt true that the purchasers of these commodities may be obliged to forego the use of some of the articles which they had before been in the habit of buying,† and so | far in some quarters may diminish demand; but, to counterbalance this diminution, the enriched merchant will become a purchaser of additional goods to the amount perhaps of the whole fifty thousand pounds, and thus prevent any general fall in the value of the native produce consumed in the country, while the value of the foreign produce so consumed has increased to the amount of the whole of the new produce imported. I see no difference between a present from abroad, and the unusual profits of a new foreign trade, in their effects upon the wealth of a state. They are equally calculated to increase the wealth of the community, by an increase both of the quantity and value of the produce obtained.
It will be said perhaps that, neither the people nor the money of the country having been by supposition increased, the value of the whole produce estimated in labour or money cannot be increased.
With regard to labour I would observe that, when I speak of the value of the whole produce of a country being able to command more labour than before, I do not mean to refer specifically to a greater number of labourers, but to say that it could either purchase more at the old price, or pay the actual labourers higher; (271) and such a state of things, with a population which cannot imme-|diately be increased, always occasions that demand for labour, which so powerfully encourages the exertions of those who were before perhaps only half paid and half employed; and is at once the surest sign and most effective stimulus of increasing wealth. It is the natural consequence of the value of the produce estimated in labour increasing faster than the population, and forms the true and healthy encouragement to the further increase of numbers.
With regard to money, this most useful measure of value would perform its functions very indifferently, if it could in no respect accommodate itself to cases of this kind; and if the importation of a valuable commodity always proportionably reduced the price of the other parts of the national produce. But this is far from being the case, even if we do not suppose any fresh importation of the precious metals. The occurrence of such an event is precisely the period, when a greater velocity is given to the circulation of the money actually in use, and when fresh paper may be issued without a fall in the rate of foreign exchanges, or a rise in the price of bullion and of goods. One or other, or both of these resources will be applied, except in the most barbarous countries; and though undoubtedly, in the case of the importation of foreign commodities which come directly into competition with domestic goods, such goods will fall in price, and the producers of them be for a time rendered poorer, yet it will very rarely indeed happen that | other goods not affected by such competition will fall in money value; and altogether no fall will take place in particular commodities sufficient to prevent a rise in the money price of the whole produce.(272)
It may naturally be expected however that more money will be imported; and, in fact, a successful extension of foreign trade is exactly that state of things which most directly leads to the importation of bullion. For what is it that the merchant exporter specifically considers as a successful extension of foreign commerce in dealing with civilized nations? Undoubtedly the power of selling his exports abroad for a greater value than usual, estimated in bullion; and of course, if the goods which he would import in return will not sell at home so much higher as to warrant their importation, a part or the whole of the returns will be imported in money. But if only such an amount be imported as shall bear the same proportion to the returns in goods as the whole of the currency of the country does to the whole of its produce, it is obvious that no difficulty whatever can occur in the circulation of the commodities of the country at their former prices, with the single exception of those articles with which the foreign goods might directly enter into competition, which in this case would never be sufficient to prevent a general increase of value in the whole produce.
I distinctly therefore differ from Mr. Ricardo in the conclusion implied in the following passage. “In all cases the demand for foreign and home | commodities together, as far as regards value, is limited by the revenue and capital of the country. If one increases, the other must diminish.”* It appears to me that in almost every case of successful foreign trade, it is a matter of unquestionable fact that the demand for foreign and home commodities taken together decidedly increases; and that the increase in the value of foreign produce does not occasion a proportionate diminution in the value of home produce.
I would still however allow that the demand for foreign and home commodities together, as far as regards value, is limited by the revenue and capital of the country; but, according to my view of the subject, the national revenue, which consists of the sum of rents, profits, and wages, is at once decidedly increased by the increased profits of the foreign merchant, without a proportionate diminution of revenue in any other quarter; whereas Mr. Ricardo is evidently of opinion that, though the abundance of commodities is increased, the revenue of the country, as far as regards value, remains the same; and it is because I object rather to the conclusion intended to be conveyed, than to the actual terms of the passage quoted, that I have used the word implied rather than expressed.(273)
It will readily be allowed that an increase in the quantity of commodities is one of the most desirable effects of foreign commerce; but I wish particularly to press on the attention of the reader | that in almost all cases, another most important effect accompanies it, expressly rejected by Mr. Ricardo, namely, an increase in the amount of exchangeable value. And that this latter effect is so necessary, in order to create a continued stimulus to productive industry, and keep up an abundant supply of commodities, that in the few cases in which it does not take place, a stagnation in the demand for labour is immediately perceptible, and the progress of wealth is checked. An extension of foreign commerce, according to the view which Mr. Ricardo takes of it, would, in my opinion, place us frequently in the situation in which this country was in the early part of 1816, when a sudden abundance and cheapness of corn and other commodities, from a great supply meeting a deficient demand, so diminished the value of the income of the country, that it could no longer command the same quantity of labour at the same price; the consequence of which was that, in the midst of plenty, thousands upon thousands were thrown out of employment—a most painful but almost unavoidable preliminary to a fall in the money wages of labour, which it is obvious could alone enable the general income of the country to employ the same number of labourers as before, and, after a period of severe check to the increase of wealth, to recommence a progressive movement. (274)
Mr. Ricardo always seems to think that it is quite the same to the labourer, whether he is able to command more of the necessaries of life by a rise in the money price of labour, or by a fall in | the money price of provisions; but these two events, though apparently similar in their effects, may be, and in general are, most essentially different. (275) An increase in the wages of labour, both nominal and real, invariably implies such a distribution of the actual wealth as to give it an increasing value, to ensure full employment to all the labouring classes, and to create a demand for further produce, and for the capital which is to obtain it. In short, it is the infallible sign of health and prosperity. Whereas a general fall in the money price of necessaries often arises from so defective a distribution of the produce of the country, that the general amount of its value cannot be kept up; in which case, under the most favourable circumstances, a temporary period of want of employment and distress is unavoidable; and in many cases, as may be too frequently observed in surveying the different countries of the globe, this fall in the money price of necessaries is the accompaniment of a permanent want of employment, and the most abject poverty, in consequence of retrograde and permanently diminished wealth.(276)
The reader will be fully aware that a great fall in the price of particular commodities, either from improved machinery or foreign commerce, is perfectly compatible with a continued and great increase, not only in the exchangeable value of the whole produce of the country, but even in the exchangeable value of the whole produce of these particular articles themselves. (277) It has been repeatedly stated that the whole value of the cottons | produced in this country has been prodigiously increased, notwithstanding the great fall in their price. The same may be said of the teas, although when they were first imported, the price per pound was greatly higher than at present; and there can be little doubt, that if we were to attempt to make our own wines by means of hot-houses, they would altogether be worth much less money, and would give encouragement to much less industry than at present.
Even when the commodity is of such a nature as not to admit of an extension of the market for it from reduced price, which very rarely happens, yet the capital and labour, which in this case will be thrown out of employment, will generally, in enterprising and commercial countries, find other channels into which they may be directed, with such profit as to keep up, and often more than keep up, the value of the national income. At the same time it should be observed, and it is a point of great importance, that it is precisely among cases of this description, where the few exceptions occur to the general and powerful tendency of foreign commerce, to raise the value of the national income; and whenever these exceptions do take place, that is, whenever the value of the national income is diminished, estimated even in money, a temporary distress from a defective distribution of the produce cannot fail to take place. If this diminished value be estimated in labour, the distress among the labouring classes, and check to the progress of wealth, will continue as long as the | diminished value so estimated lasts: and if it could be proved that, under particular circumstances, any species of foreign trade tended permanently to diminish the power of the national produce in the command of domestic and foreign labour, such trade would certainly have the effect of checking permanently the progress of wealth and population.(278)
The causes of an increase in the effective demand for particular commodities are of very easy explanation; but it has been considered, and with reason, as not very easy to explain the cause of that general briskness of demand which is sometimes so very sensibly felt throughout a whole country, and is so strikingly contrasted with the feeling which gives rise to the expression of trade being universally very dead. As the specific and immediate cause of this general increase of effective demand, I should decidedly point to such a distribution of the produce, and such an adaptation of it to the wants and tastes of the society as will give the money price for which it sells an increased command of domestic and foreign labour; and I am inclined to think that, if this test be applied to all the striking cases that have occurred, it will rarely or never be found to fail.(279)
It cannot for a moment be doubted, for instance, that the annual increase of the produce of the United States of America, estimated either in bullion or in domestic and foreign labour, has been greater than that of any country we are acquainted with, and that this has been greatly owing to their | foreign commerce, which, notwithstanding their facility of production, has given a value to their corn and raw produce equal to what they bear in many of the countries of Europe, and has consequently given to them a power in commanding the produce and labour of other countries quite extraordinary, when compared with the quantity of labour which they have employed. It can as little be doubted that in this country, from 1793 to 1814, the whole exchangeable value of the produce, estimated either in domestic and foreign labour, or in bullion, was greatly augmented every year. In this increase of value, as well as riches, the extension of our foreign commerce has been considered, almost without a dissentient opinion, as a most powerful agent; and certainly till 1815, no appearances seemed to indicate, that the increasing value of our imports had the slightest tendency to diminish the value of our domestic produce. They both increased, and increased greatly, together, estimated either in bullion or labour.(280)
But while in every country to which it seems possible to refer, an increase of value will be found to accompany increasing prosperity and riches, I am inclined to think that no single instance can be produced of a country engaged in a successful commerce, and exhibiting an increasing plenty of commodities, where the value of the whole produce estimated in domestic and foreign labour was retrograde or even stationary. And of the two ways in which capital may be accumulated, as stated by Mr. Ricardo in his chapter on Fo-|reign Commerce, namely an increase of revenue from increased profits, or a diminished expenditure, arising from cheap commodities,* I believe the latter never has been, nor ever will be, experienced as an effective stimulus to the permanent and continued production of increasing wealth.(281)
Mr. Ricardo will perhaps say, and say truly, that according to his own view of value, foreign commerce will increase it, as soon as more labour has been employed in the production of all the commodities taken together, which the country obtains; and that the plenty produced by foreign trade will naturally encourage this employment. But what I wish specifically to state is, that the natural tendency of foreign trade, as of all sorts of exchanges by which a distribution is effected better suited to the wants of society, is immediately to increase the value of that part of the national revenue which consists of profits, without any proportionate diminution elsewhere, and that it is precisely this immediate increase of national income arising from the exchange of what is of less value in the country, for what is of more value, that furnishes both the power and will to employ more labour, and occasions the animated demand for labour, produce and capital, which is a striking and almost universal accompaniment of successful foreign commerce; whereas, a mere abundance of commodities falling very greatly in value compared with labour, | would obviously at first diminish the power of employing the same number of workmen, and a temporary glut and general deficiency of demand could not fail to ensue in labour, in produce, and in capital, attended with the usual distress which a glut must occasion.(282)
Mr. Ricardo always views foreign trade in the light of means of obtaining cheaper commodities. But this is only looking to one half of its advantages, and I am strongly disposed to think, not the larger half. In our own commerce at least, this part of the trade is comparatively inconsiderable. The great mass of our imports consists of articles as to which there can be no kind of question about their comparative cheapness, as raised abroad or at home. If we could not import from foreign countries our silk, cotton and indigo, our tea, sugar, coffee and tobacco, our port, sherry, claret and champagne, our almonds, raisins, oranges and lemons, our various spices and our various drugs, with many other articles peculiar to foreign climates, it is quite certain that we should not have them at all. To estimate the advantage derived from their importation by their cheapness, compared with the quantity of labour and capital which they would have cost, if we had attempted to raise them at home, would be perfectly preposterous. In reality, no such attempt would have been thought of. If we could by possibility have made fine claret at ten pounds a bottle, few or none would have drunk it; and the actual quantity of labour and capital employed in obtaining these | foreign commodities is at present beyond comparison greater than it would have been if we had not imported them.
We must evidently therefore estimate the advantage which we derive from such a trade upon a very different principle. This is the simple and obvious one often adverted to as the foundation of every act of barter, whether foreign or domestic, namely, the increased value which results from exchanging what is wanted less for what is wanted more. After we had, by our exports of home commodities, obtained in return all the foreign articles above-mentioned, we might be very much puzzled to say whether we had increased or decreased the quantity of our commodities, but we should feel quite certain that the new distribution of produce which had taken place, by giving us commodities much better suited to our wants and tastes than those which had been sent away, had decidedly increased the exchangeable value of our possessions, our means of enjoyment, and our wealth.
Taking therefore a very different view of the effects of foreign commerce on exchangeable value from Mr. Ricardo, I should bring forwards the extension of markets as being, in its general tendency, pre-eminently favourable to that increase of value and wealth which arises from distribution.(283)
It is out of this increase thatHere as well as in many other places Mr. Malthus appears to think that commerce and the exchange of commodities adds greatly to the value of commodities and enables merchants to add to the amount and value of their profits, and further that it is from this source that all the great savings and accumulations are made.
It is undoubtedly true that if “some of the London goods were not more valued in Glasgow than in London, and some Glasgow goods more valued in London than in Glasgow, the merchants who exchange the articles in which these towns trade, would be neither doing themselves any good nor any one else,” by exchanging them.
But how does this prove that these goods attain any higher value by this exchange or afford any additional profits for capital to the merchants who are concerned in sending them from one place to another?
Fill the mass of goods in the country, in consequence of these exchanges, command more labour, or will they exchange for more of any medium of a known value?
The price of hardware in London depends on its cost of production, that is to say it will only be produced on the condition that its price repays all the expences bestowed upon it, together with the ordinary and general rate of profits. Whether the common and usual demand be for a given quantity, or for ten times that quantity, after an inconsiderable interval, that will be its price. Mr. Malthus might say that that interval was one of great importance, and if there be a demand for the commodity, the manufacturer will in that interval obtain great profits, and be able to make valuable savings.—I grant it, but at whose expence will these greater profits1 be made, and will they add to the value of the mass of commodities? If the ordinary price of a certain quantity of hardware be £100, and in consequence of demand, I am obliged to give £110 for it, the dealer will get larger profits, but who pays them?
Mr. Malthus looks only at the manufacturer and would have us believe that he gets larger profits, and no one is the worse for them, and therefore that they are clear gains to the country. But I say the consumer pays them for one of three things he must do, he must content himself with a less quantity of hardware—he must deny himself the expenditure of £10 on some other commodity which he usually consumed, or if he enjoys the same quantity of commodities as before he is not2 enabled to add to his capital from savings by £10 to the amount he used to do. If he saves the £10 from his expenditure he indeed enables the manufacturer of hardware to add £10—to his capital from his increased profits, but the same result would have taken place if by any other means he could have been prevailed upon to save £10—out of his expenditure, with this difference indeed that in the one case it would be added to his own capital in the other to the capital of the Hardware manufacturer.—In both cases the national capital will be increased in value £10.—and more labour can be employed, if it has not risen in value. And here I would just remark that this saving out of increased gains, which is the means by which all great fortunes are made according to Mr. Malthus, is a saving really effected by diminished expenditure, a source of saving very much undervalued by Mr. Malthus as will be seen in Page 421 of his work. But to revert to the subject immediately before us. If the purchaser of hardware purchases the usual quantity of goods he is not enabled to save so much by £10 as before and in this case the saving may indeed be made by the hardware manufacturer, but at the expence of the saving of another member of the community, and nothing whatever will be added to the national capital. If now you suppose that the demand of the merchant for the Glasgow market does not raise the price of hardware in London, but that he can nevertheless charge a high profit to the Glasgow1 consumer for it, I have a similar remark to make. Either he makes only the usual and ordinary profits on his stock, or he makes greater profits. If he makes only the usual profits there can be no pretence for saying that he has added any thing by this particular transaction to the Natl. capital. If his profits are2 high and above the usual level they can only remain so till other capitalists3 can be brought to compete with him, and then his profits, and the price of his goods will sink to their natural level. I may be again told that it is during this interval of high profits, that savings are made, and capitals increased—but my answer is the same as before. When the price of hardware sinks in Glasgow to its level price, will the saving made by the purchasers of this article be expended on other things or will it be added to capital. If I am told they will be expended on other things then I acknowledge that the transfer of £10 from the pocket of the consumer to the pocket of the merchant during the season of high profit might be favorable to the accumulation of capital, for I know one to be extravagant and the other may possibly be saving, but here again it must be allowed that effects quite as good would have resulted, if by lowering the price of goods the consumer had saved £10 from his expenditure, and added it to his capital.
The general profits of a country depend as I have frequently said on the state of wages, when wages are low profits must be high—but the particular profits of a particular set of manufacturers, or a particular set of merchants, must depend, whatever may be the state of wages, on the4 price which they can charge for their commodities to the consumers.
The natural price of a certain quantity of cloth a certain quantity of shoes, a certain quantity of hats &c., we will suppose to be £100. If the owner of the cloth can get £110 for his cloth, it must be at the expence of the consumer, and as5 these consumers can only purchase this particular commodity with the commodity of which they are possessed, its rise is the same thing to them as the fall of their commodity. If before the rise, the shoemaker gave half the quantity of his shoes for half the quantity of the cloth, he must now when the price of cloth has risen to £110—give one tenth more or 55 p.c. of his shoes for the same quantity. In all cases then the excess of profits of a particular trade1 are made at the expence of the consumer, and in proportion as it adds to the power of one of increasing his capital, it diminishes the power of another to add to his. When a merchant makes large profits by selling2 his goods at a high price, to foreign countries, his profits are profits to the country3 of which he is an inhabitant, but they are not less obtained at the expence of the consumer, but in this case the consumer is a foreigner, and the transfer is made from one country to another.
From any thing which I have said it must not be inferred that I undervalue the benefits which would result both to Glasgow and London from the interchange of their commodities, I only deny that these benefits would shew themselves in the form of high profits, and increased value. Inasmuch as the labour both of London and Glasgow will be more productively directed, they will both derive advantages from this trade. If Glasgow made the hardware for herself, or London the cotton goods, they would each obtain less hardware, and cotton goods, together, with a given capital.—By the better division of labour, cotton goods will be more cheap in London, and hardware more cheap in Glasgow—the advantage then to both places is not they have any increase of value, but with the same amount of value they are both able to consume and enjoy an increased4 quantity of commodities, and if they should have no inclination to indulge themselves in the purchase of an additional quantity, they will have increased means of making savings from their expenditure. It cannot be true then “that the value of the revenue will be greater or less, according to the market prices of the commodities produced”5 for supposing the cost of production of commodities not to alter, the high market value of one really means the low market value of another, for commodities are purchased with commodities, and if the value of cloth is high estimated in silk, silk must be low estimated in cloth. If the profits of the clothier are high estimated in silk and all other commodities, it is only because a contribution is made to those profits out of the funds of all the consumers of cloth.
In the distribution of commoditiesIt is of no importance in elucidating correct principles in what medium value is estimated, provided only that the medium itself is invariable. Money—corn, labour are all equally good. Mr. Malthus in using money appears to me frequently to mistake the variations of money itself, for the variations in the commodities of which he is speaking. An alteration in the1 value of money has no effect on the relative value of commodities, for it raises or sinks their price in the same proportion; but it is the alteration in the relative value of commodities, particularly of necessaries, and luxuries, which produce the most important consequences in the view of the Political Economist.
But if the farmer sold his produceWhether he would command the same quantity of labour next year, would depend on the price of labour. It is probable that the farmer would be much distressed even if labour fell in some proportion to corn, because his contract with his landlord is to pay him a money rent; this rent remains the same whatever may be the price of produce. If however the farmer can employ less labour, the landlord, if he receive his rent, can employ more. Mr. Malthus thinks that there will be a diminished power to employ labour, and consequently a diminished demand for it—he allows2 that the price of corn, the chief article consumed by the labourer, will fall, and yet in his argument he assumes that labour will be at the same price as before. Mr. Malthus adds “And when afterwards a great fall of money price took place in all manufactured products.” But why should manufactured products fall? their cost of production is the same as before, and corn falls relatively to them only because corn is abundant,—is cheaply produced, and they are not so.
That has happened? an addition to the quantity of corn, —an increased quantity of commodities in fact compared with the whole population, and what is to be the result, according to Mr. Malthus? Universal distress to all classes. I can understand why the farmer should be distressed as I have already explained. But every man is not a producer of corn, and under engagements to pay money rents. Suppose wages to fall in proportion to the saving made by the labourer in the purchase of his corn, he would still be able to purchase as many manufactured commodities as before— if his wages did not fall, he could purchase more. Every manufacturer himself could purchase more manufactured commodities from other manufacturers. Having less to expend on bread, he would have more to expend on other things—the landlord would be in the same situation, and although the demand for manufactures would undoubtedly be diminished on the part of the agricultural class, it cannot I think be disputed that it would be increased in respect of the other classes—manufactures would not then fall in money price, nor would the manufacturers be unable to command the labour of the same number of workmen as before. If the price of labour fell, they would be able to command more.
The same, or a greater quantityMr. Malthus says “the whole would fall in exchangeable value” what does this mean? would they fall in money value? Mr. Malthus would answer in the affirmative. I ask then whether this money value would command a greater quantity of labour. Mr. Malthus says the labouring classes would be thrown out of work—if so, the money value would command more labour than before. Have not the commodities1 then risen in real value according to Mr. Malthus’s definition of real value?
The clearest principles of Political Economy shew that the profits of stock might be lower for any length of time than the state of the land rendered necessary.On the land last cultivated, and paying no rent, profits could not be lower for any length of time, than the state of the land and the reward to the workman1 rendered necessary. There must then be two rates of profit for capital, one for capital employed in Agriculture, another for capital employed in Manufactures, and yet the one capitalist may freely remove his capital to the employment of the other. Can this be?
The motives which urge individualsSee remark 442.2
But as it is so glaring &c.I quite agree with Mr. Malthus that this is the fair criterion by which to judge of the merchants profits, but I contend that they are not clear gain—they are often made at the expence of the savings of some of his fellow citizens.
#x201C;If a foreign power says Mr. Malthus3 were to send to a particular merchant commodities of a new description which would sell in the London market for fifty thousand pounds, the wealth of that merchant would be increased to that extent; and who I would ask would be the poorer?”4 That would depend on the nature of the commodities, and on the fund from which these goods were purchased, by the consumers, from the merchants. If they were purchased from that fund which would otherwise have been saved, and the commodities so bought were1 immediately consumed the capital of the country would not be increased by the present—2 the only consequence would be an increased quantity of enjoyments for that particular year. If they were purchased instead of some other commodity,—that other commodity was given to the merchant in exchange for the foreign commodity,3 and employed by him as capital, there would be, on the whole, an increased saving of £50000 in consequence of this present. This case differs in nothing from the case of Glasgow and London. The accumulation is made in consequence of4 greater savings made out of the annual revenue of the country. You have had £50000 given you which you resolve to save, and add to your capital.
It appears to me that if the twoMr. Malthus misunderstands me. I do not mean literally that the commodity imported will be of no more value than the commodity exported it must at least be so much greater value as to compensate for the labour employed in bringing it in, together with the profits of the merchant for the time his capital was employed, that constitutes in fact the cost of production of that commodity. But the commodity sent out has for the same reasons the same value added to it, and therefore if you have increased the cost of production and the value of one commodity, so also have you increased the cost of production and value of the other. If I send £100 worth of hats which sell for £105 in France, and receive £100 worth of claret which sells for £105 here, it appears as if I gave £100 for £105 and to the French merchant it will appear as if he received £105 for £100, but in fact they both give and receive the same value, the £5 is added to compensate for expences and profits of capital. Any £100 employed at home for the same time, and attended with the same expences of carriage, or expences of any other kind, would equally yield £105. By the foreign trade then we have got a more desirable commodity, but not a more valuable commodity. Am I not then justified in saying that “No extension of foreign trade will immediately increase the amount of value in a country although it will very powerfully contribute to increase the mass of commodities and therefore the sum of enjoyments.”
With regard to labour I would observeHere is a new explanation of Mr. Malthus’ measure of real value in exchange. If I wanted to know whether I had a greater value this year than last—I cannot ascertain this fact by a comparison of the number of labourers I could employ last year and the number I can employ1 this—2 for I should equally have a greater value if I could command no more labour but paid the actual labourers higher. If I understand this it means, I shall have a greater value if I can exchange my commodities for more of this measure of value—and I shall equally have a greater value if I cannot.
And altogether no fall will take place in particular commodities, sufficient to prevent a rise in the money price of the whole produce.Suppose we allow this, the question whether the gain of the merchant is a new value, or a value obtained at the expence of the consumers is not thereby determined. Mr. Malthus and I both allow that an advantage is gained by the introduction of cheap or desirable1 foreign commodities, but I say that the whole of it should belong to the consumer and if at any time the merchant enjoys it, it is at the expence of the consumer and by depriving him of it. With the consumer it must finally rest.
It appears to me that in almost every caseIf four men have a thousand a year each they cannot spend more than £4000 a year.
The more value they expend on foreign commodities, the less they will have to expend on home commodities.2 It will be of immense importance to buy cheap, that is to say to obtain plenty of commodities for a little value; and inasmuch as foreign trade, and an extensive market, enables them to do this, it is beneficial to the country. Mr. Malthus says “But according to my view of the subject, the national revenue, which consists of the sum of rents, profits, and wages is at once decidedly increased by the increased profits of the foreign merchant.” The national revenue is increased! in what? in the greater quantity or better quality of consumable commodities; but not in their greater value.3 But how does this benefit shew itself? perhaps for a short time in the increased profits of the merchant, but always finally in the cheap value of the foreign commodity. It is precisely the same as in the case of a manufacturer who discovers an improved1 machine with which to manufacture his goods. While competition does not fully act upon him, and oblige him to sink the price of his goods to the cost of production, he gets great profits, but finally the advantage of the improvement rests wholly with the consumer.2
The argument in my chapter on foreign trade is grounded on the supposition which is I believe not disputed that excepting for short intervals of time profits in foreign trade cannot be elevated above the general rate of profit, and whenever they are I am of opinion, and have given my reasons for that opinion, that the equalization of profits will be brought about by a fall in the profits of foreign trade, and not by the general rise of profits in other trades.
During the interval that profits in foreign trade are elevated above general profits, those who are engaged in it will get more and nobody else less, and so far the national revenue will be increased; but as soon as the competition of other capitalists have sunk the profits of foreign trade, to the general level of profits, although the national revenue, when estimated in money, will be of less value than before, nothing will be lost to the country, the advantage which was before reaped by the merchant will be now enjoyed by the consumer. The merchant sells at a lower price and gets less profit—the consumer buys at a cheaper price and the saving which he makes is precisely equal in amount to the profit3 which was before enjoyed and is now relinquished4 by the merchant. But in this interval the whole produce of the country was of greater value! Of a greater market value certainly, but was this attended with any real advantage to the country, seeing that immediately when it is relinquished it is equally enjoyed by another part of the community? The case is precisely similar to a man who discovers a new machine, and for some time can keep his secret—he will enjoy during that interval, large profits, and the annual revenue of the country will be increased while he sells his goods above their natural price, but will one particle of this advantage be lost when his cheaper mode of producing the commodity is universally known, and the consumer is enabled to gain an advantage precisely equal indeed more than equal5 to that which the particular manufacturer relinquishes? If the larger gains of the foreign merchant, or of the individual manufacturer be desirable, then is it an argument for a general system of monopolies—a system which considers only the profits of capitalists, and is little solicitous about the comforts and advantages of consumers.
It will readily be allowed“An increase in the amount of exchangeable value” ! in what medium?
Are not the common and usual profits of stock a sufficient stimulus to productive industry?
#x201C;So diminished the value of the income of the country1 that it could no longer command the same quantity of labour at the same price; the consequence of which was &c. &c.” But if commodities fell in price, and would command the same quantity of labour at a lower price, who would suffer by it? Not the employers of labour for with the same quantity of commodities they could command the same labour,—not the labourers for they could command in exchange for their labour the same quantity of commodities. And if either did suffer, a corresponding benefit would be obtained by the other. This is merely a variation in money.2
Mr. Ricardo always seems toWhat are we to say to a system of political economy which at one moment insists that value is measured by the quantity of labour it can command, and at the next moment rejects that measure, and shews its insufficiency. If money wages remain the same, and every commodity on which the labourers wages are expended fall in3 money price, the labourers wages are really increased,4 in Mr. Malthus measure of value and, if the amount of commodities be not increased, they must have fallen in his measure of real value, because under these circumstances the same quantity of commodities cannot command the same quantity of labour. If money wages increase, and the price of commodities do not rise, real wages will also increase and in this case too if commodities be not increased in quantity their real value will have fallen. Are not these two cases precisely the same? I know Mr. Malthus will say that the rise in the money price of wages will be an indication of an increased quantity of commodities and an increased demand for labour, but the falling price of commodities with stationary money wages will afford no such indication.
But he has given no proof of this.
May not money become more valuable, and in that case would not a falling price of commodities with stationary money wages indicate an increasing demand for labour.
Why should commodities fall in price generally from any other cause but that of an increased value of money? I know of no other cause which could produce such an effect except new facilities in the production of them all save only money.1
Mr. Ricardo always seems to thinkMr. Malthus mistakes me. I fully agree with him that an increase in the wages of labour implies full employment to all the labouring classes, but so does a fall in the money price of provisions without a fall in money wages2 provided the fall in the price of provisions is not caused by an accidental glut, but by a cheaper mode of producing provisions.
Mr. Malthus’ error is in supposing that cheap corn, and cheap commodities, necessarily imply a glut of corn and commodities. We agree that a glut is an evil. It generally implies production without profit, and sometimes without even the return of the capital employed. It arises always I think from a bad selection in the object produced, but cheapness from facility of production, which I think is the only legitimate cheapness, never fails of being attended with the happiest effects, and is as different from a glut, as light is from darkness.
The reader will be awareThese are compatible, but not essential to each other and in general do not happen at the same time.3 The advantage from a cheap price of corn, in consequence of facilities, either of production or importation, would be great, although it may be clearly demonstrated that from the loss of rents the money value of the mass of commodities would fall, and for a time at least, they would not command any great additional quantity of labour.*
If it could be provedIf it could be proved!1 which I believe it cannot in any case. But may not the national produce have less power in the command of labour, and yet both wealth and population increase?2 If with the same produce wages were to rise, population would probably increase, and though profits would be diminished, might they not yet be sufficiently high to allow further savings to be made? and further wealth to be acquired?3
If from £1000 my profits were reduced to £500, I should nevertheless increase my wealth if I saved £100.
As the specific and immediate causeIn4 all cases a good distribution of the produce, and an adaptation of it to the wants and tastes of society are of the utmost importance to the briskness of trade and the accumulation of capital. The want of this is in my opinion the only cause of the stagnation which commerce at different times experiences. It may be all traced to miscalculation, and to the production of a commodity which is not wanted instead of one which is wanted.
But in allowing this must we deny the beneficial effects which arise from the fall in the price of commodities, on account of the increased facility of their production? Increase that facility ten fold, yet if the commodities you do produce are well adapted to the wants of the society, they will all be in demand, and if they are not, it only proves that the producers have been mistaken on that point and have not fulfilled the conditions necessary to ensure that briskness of demand, which could not fail to have followed from a more judicious selection of objects.
In this increase of value &c. &c.If a nation saves, and employs more labour in production, it will increase the quantity and1 value of its products. In such case it is certain that it may increase the value of foreign imports, without any diminution in the value of home commodities. Mr. Malthus could not suppose that I meant to say that the value and amount2 of foreign and home commodities might not increase at the same time.
I believe the latter neverI believe, quite the contrary—I believe it is a more powerful stimulus even than that to which Mr. Malthus exclusively refers. Is not this opinion of Mr. Malthus inconsistent with that which he gives in another part of his work3 on the beneficial effects to the national wealth4 which have resulted from improvements on the land. How did these operate but by enabling us to make greater savings from expenditure. I know no other way of saving, but saving from unproductive expenditure to add to productive expenditure.
But what I wish specifically &c. &c.A merchant is possessed of a bale of cotton goods, which he exports, and gets in exchange a pipe and a quarter of wine, he sells the pipe in England for a bale of cotton goods, and retains the quarter pipe for his own profit, and disposes of it as he may think best.
He discovers a new market, and recommences his operation, and for his bale of cotton goods he gets not only a pipe and a quarter of wine, but also1 100 lbs. of indigo. If he can still exchange a pipe of wine for a bale of cotton goods at home2 , his profits will have increased;—instead of a quarter of a pipe of wine, as before, he will get that and the indigo besides. But suppose, that as well as four fifths of his wine, he must also give four fifths of the indigo for3 the bale of cotton goods, his profits indeed will have fallen to the general level of profits, at which I suppose they were in the first instance,—but will not every man who has a bale of cotton goods or goods of an equivalent value, gain what he gives up, and have they not precisely the same power of saving which he before had. The question seems to me too clear to be for one moment doubted. Here is the same quantity in both cases of English and foreign commodities, and why should there be a glut more in one case than in the other? Mr. Malthus never states a specific simple case for the purpose of following it in all its bearings, if he did, we could not differ as we appear to do.
Taking therefore a very different viewFrom what Mr. Malthus has himself said in respect to my opinions he must know that I as well as himself “should bring forward the extension of markets as being, in its general tendency, pre-eminently favorable to that increase of wealth which arises from distribution.” Yet his language here would lead his reader to suppose otherwise. I should not say it would increase the value of such1 wealth because as the reader knows I measure value by a different medium from Mr. Malthus.
Of the Distribution occasioned by unproductive Consumers, considered as the Means of increasing the exchangeable Value of the whole Produce
The third main cause which tends to keep up and increase the value of produce by favouring its distribution is the employment of unproductive labour, or the maintenance of an adequate proportion of unproductive consumers.
It has been already shewn that, under a rapid accumulation of capital, or, more properly speaking, a rapid conversion of unproductive into productive labour, the demand, compared with the supply of material products, would prematurely fail, and the motive to further accumulation be checked, before it was checked by the exhaustion of the land. It follows that, without supposing the productive classes to consume much more than they are found to do by experience, particularly when they are rapidly saving from revenue to add to their capitals, it is absolutely necessary that a country with great powers of production should possess a body of unproductive consumers.(284)
In the fertility of the soil, in the powers of man to apply machinery as a substitute for labour, and in the motives to exertion under a system of private property, the great laws of nature have provided for the leisure of a certain portion of society; and | if this beneficent offer be not accepted by an adequate number of individuals, not only will a positive good, which might have been so attained, be lost, but the rest of the society, so far from being benefited by such self-denial, will be decidedly injured by it.
What the proportion is between the productive and unproductive classes of a society, which affords the greatest encouragement to the continued increase of wealth, it has before been said that the resources of political economy are unequal to determine. (285) It must depend upon a great variety of circumstances, particularly upon fertility of soil and the progress of invention in machinery. A fertile soil and an ingenious people can not only support a considerable proportion of unproductive consumers without injury, but may absolutely require such a body of demanders, in order to give effect to their powers of production. While, with a poor soil and a people of little ingenuity, an attempt to support such a body would throw land out of cultivation, and lead infallibly to impoverishment and ruin.
Another cause, which makes it impossible to say what proportion of the unproductive to the productive classes is most favourable to the increase of wealth, is the difference in the degrees of consumption which may prevail among the producers themselves.
Perhaps it will be said that there can be no occasion for unproductive productive consumers, if a consumption sufficient to keep up the value of the produce | takes place among those who are engaged in production.
With regard to the capitalists who are so engaged, they have certainly the power of consuming their profits, or the revenue which they make by the employment of their capitals; and if they were to consume it, with the exception of what could be beneficially added to their capitals, so as to provide in the best way both for an increased production and increased consumption, there might be little occasion for unproductive consumers. But such consumption is not consistent with the actual habits of the generality of capitalists. The great object of their lives is to save a fortune, both because it is their duty to make a provision for their families, and because they cannot spend an income with so much comfort to themselves, while they are obliged perhaps to attend a counting-house for seven or eight hours a day.(286)
It has been laid down as a sort of axiom among some writers that the wants of mankind may be considered as at all times commensurate with their powers; (287) but this position is not always true, even in those cases where a fortune comes without trouble; and in reference to the great mass of capitalists, it is completely contradicted by experience. Almost all merchants and manufacturers save, in prosperous times, much more rapidly than it would be possible for the national capital to increase, so as to keep up the value of the produce. But if this be true of them as a body, taken one with another, it is quite obvious that, with their actual | habits, they could not afford an adequate market to each other by exchanging their several products.
There must therefore be a considerable class of other consumers, or the mercantile classes could not continue extending their concerns, and realizing their profits. In this class the landlords no doubt stand pre-eminent; but if the powers of production among capitalists are considerable, the consumption of the landlords, in addition to that of the capitalists themselves and of their workmen, may still be insufficient to keep up and increase the exchangeable value of the whole produce, that is, to make the increase of quantity more than counterbalance the fall of price. And if this be so, the capitalists cannot continue the same habits of saving. They must either consume more, or produce less; and when the mere pleasure of present expenditure, without the accompaniments of an improved local situation and an advance in rank, is put in opposition to the continued labour of attending to business during the greatest part of the day, the probability is that a considerable body of them will be induced to prefer the latter alternative, and produce less. But if, in order to balance the demand and supply, a permanent diminution of production takes place, rather than an increase of consumption, the whole of the national wealth, which consists of what is produced and consumed, and not of the excess of produce above consumption, will be decidedly diminished.
Mr. Ricardo frequently speaks, as if saving were an end instead of a means. (288) Yet even with | regard to individuals, where this view of the subject is nearest the truth, it must be allowed that the final object in saving is expenditure and enjoyment. But, in reference to national wealth, it can never be considered either immediately or permanently in any other light than as a means. It may be true that, by the cheapness of commodities, and the consequent saving of expenditure in consumption, the same surplus of produce above consumption may be obtained as by a great rise of profits with an undiminished consumption; and, if saving were an end, the same end would be accomplished. But saving is the means of furnishing an increasing supply for the increasing national wants. If however commodities are already so plentiful that an adequate portion of them is not consumed, the capital so saved, the office of which is still further to increase the plenty of commodities, and still further to lower already low profits, can be comparatively of little use. On the other hand, if profits are high, it is a sure sign that commodities are scarce, compared with the demand for them, that the wants of the society are clamorous for a supply, and that an increase in the means of production, by saving a considerable part of the new revenue created by the high profits, and adding it to capital, will be specifically and permanently beneficial.(289)
National saving, therefore, considered as the means of increased production, is confined within much narrower limits than individual saving. While some individuals continue to spend, other | individuals may continue to save to a very great extent; but the national saving, or the balance of produce above consumption, in reference to the whole mass of producers and consumers, must necessarily be limited by the amount which can be advantageously employed in supplying the demand for produce; and to create this demand, there must be an adequate consumption either among the producers themselves, or other classes of consumers.
Adam Smith has observed “that the desire of food is limited in every man by the narrow capacity of the human stomach; but the desire of the conveniences and ornaments of building, dress, equipage, and household furniture, seems to have no limit or certain boundary.” That it has no certain boundary is unquestionably true; that it has no limit must be allowed to be too strong an expression, when we consider how it will be practically limited by the countervailing luxury of indolence, or by the general desire of mankind to better their condition, and make a provision for a family; a principle which, as Adam Smith himself states, is on the whole stronger than the principle which prompts to expense.* But surely it is a glaring misapplication of this statement in any sense in which it can be reasonably understood, to say, that there is no limit to the saving and employment of capital except the difficulty of procuring food. (290) It is to found a doctrine upon the unlimited desire of man-|kind to consume; then to suppose this desire limited in order to save capital, and thus completely alter the premises; and yet still to maintain that the doctrine is true. Let a sufficient consumption always take place, whether by the producers or others, to keep up and increase most effectually the exchangeable value of the whole produce; and I am perfectly ready to allow that, to the employment of a national capital, increasing only at such a rate, there is no other limit than that which bounds the power of maintaining population. (291) But it appears to me perfectly clear in theory, and universally confirmed by experience, that the employment of a capital, too rapidly increased by parsimonious habits, may find a limit, and does, in fact, often find a limit, long before there is any real difficulty in procuring the means of subsistence; and that both capital and population may be at the same time, and for a period of great length, redundant, compared with the effective demand for produce.
Of the wants of mankind in general, it may be further observed, that it is a partial and narrow view of the subject, to consider only the propensity to spend what is actually possessed. It forms but a very small part of the question to determine that if a man has a hundred thousand a year, he will not decline the offer of ten thousand more; or to lay down generally that mankind are never disposed to refuse the means of increased power and enjoyment. The main part of the question respecting the wants of mankind, relates to their | power of calling forth the exertions necessary to acquire the means of expenditure. (292) It is unquestionably true that wealth produces wants; but it is a still more important truth, that wants produce wealth. Each cause acts and re-acts upon the other, but the order, both of precedence and of importance, is with the wants which stimulate to industry; and with regard to these, it appears that, instead of being always ready to second the physical powers of man, they require for their development, “all appliances and means to boot.” The greatest of all difficulties in converting uncivilized and thinly peopled countries into civilized and populous ones, is to inspire them with the wants best calculated to excite their exertions in the production of wealth. One of the greatest benefits which foreign commerce confers, and the reason why it has always appeared an almost necessary ingredient in the progress of wealth, is, its tendency to inspire new wants, to form new tastes, and to furnish fresh motives for industry. Even civilized and improved countries cannot afford to lose any of these motives. It is not the most pleasant employment to spend eight hours a day in a counting-house. Nor will it be submitted to after the common necessaries and conveniences of life are attained, unless adequate motives are presented to the mind of the man of business. Among these motives is undoubtedly the desire of advancing his rank, and contending with the landlords in the enjoyment of leisure, as well as of foreign and domestic luxuries. |
But the desire to realize a fortune as a permanent provision for a family is perhaps the most general motive for the continued exertions of those whose incomes depend upon their own personal skill and efforts. Whatever may be said of the virtue of parsimony or saving, as a public duty, there cannot be a doubt that it is, in numberless cases, a most sacred and binding private duty; and were this legitimate and praiseworthy motive to persevering industry in any degree weakened, it is impossible that the wealth and prosperity of the country should not most materially suffer. But if, from the want of other consumers, the capitalists were obliged to consume all that could not be advantageously added to the national capital, the motives which support them in their daily tasks must essentially be weakened, and the same powers of production would not be called forth.(293)
It has appeared then that, in the ordinary state of society, the master producers and capitalists, though they may have the power, have not the will, to consume to the necessary extent. And with regard to their workmen, it must be allowed that, if they possessed the will, they have not the power. It is indeed most important to observe that no power of consumption on the part of the labouring classes can ever, according to the common motives which influence mankind, alone furnish an encouragement to the employment of capital. As I have before said, nobody will ever employ capital merely for the sake of the demand occasioned by those who work for him. (294) Unless | they produce an excess of value above what they consume, which he either wants himself in kind, or which he can advantageously exchange for something which he desires, either for present or future use, it is quite obvious that his capital will not be employed in maintaining them. When indeed this further value is created and affords a sufficient excitement to the saving and employment of stock, then certainly the power of consumption possessed by the workmen will greatly add to the whole national demand, and make room for the employment of a much greater capital.
It is most desirable that the labouring classes should be well paid, for a much more important reason than any that can relate to wealth; namely, the happiness of the great mass of society. But to those who are inclined to say that unproductive consumers cannot be necessary as a stimulus to the increase of wealth, if the productive classes do but consume a fair proportion of what they produce, I would observe that as a great increase of consumption among the working classes must greatly increase the cost of production, it must lower profits, and diminish or destroy the motive to accumulate, before agriculture, manufactures, and commerce have reached any considerable degree of prosperity. If each labourer were actually to consume double the quantity of corn which he does at present, such a demand, instead of giving a stimulus to wealth, would probably throw a great quantity of land out of cultivation, | and greatly diminish both internal and external commerce.(295)
There is certainly however very little danger of a diminution of wealth from this cause. Owing to the principle of population, all the tendencies are the other way; and there is much more reason to fear that the working classes will consume too little for their own happiness, than that they will consume too much to allow of an adequate increase of wealth. (296) I only adverted to the circumstance to shew that, supposing so impossible a case as a very great consumption among the working producers, such consumption would not be of the kind to push the wealth of a country to its greatest extent.
[It might be desirable, on other accounts than with a view to wealth, that the labouring classes should not work so hard; but as this could only be accomplished by a simultaneous resolution among workmen, it cannot take place.
With the single exception of the effects to be expected from prudential habits, there is no chance of an increased consumption among the working classes; and if there were, it is not the kind of consumption best calculated to encourage the employment of capital.
When the demands of the landlords have been added to those of the productive classes, it appears from experience that profits have often prematurely fallen.
But if the master producers have not the will to consume sufficiently, and the working producers have not the power, then, if the aid of the landlords be not found sufficient, the consumption required must take place among the unproductive labourers of Adam Smith.
Every country must necessarily have a body of unproductive labourers; but it is a most important practical question to determine, whether they detract from the wealth of a country, or encourage it.
The solution of this question depends upon the solution of the greater questions, 1st. whether the motive to accumulate may be checked from the want of demand, before it is checked by the difficulty of procuring food; and 2dly, whether such check is probable.
An attempt has been made to determine these two questions in different parts of the present work, and if the determination be just, we may conclude that a body of unproductive labourers is necessary as a stimulus to wealth.
Of the persons constituting the unproductive classes, those which are paid voluntarily will be considered in general as the most useful in exciting industry, and the least likely to be prejudicial by interfering with the costs of production.
Those which are supported by taxes are equally useful with regard] to distribution and de-|mand; they frequently occasion a division of property more favourable to the progress of wealth than would otherwise have taken place; they ensure that consumption which is necessary to give the proper stimulus to production; and the desire to pay a tax, and yet enjoy the same means of gratification, must often operate to excite the exertions of industry quite as effectually as the desire to pay a lawyer or physician. Yet to counterbalance these advantages, which so far are unquestionable, it must be acknowledged that injudicious taxation might stop the increase of wealth at almost any period of its progress, early or late;* and that the most judicious taxation might ultimately be so heavy as to clog all the channels of foreign and domestic trade, and almost prevent the possibility of accumulation.
The effect therefore on national wealth of those classes of unproductive labourers which are supported by taxation, must be very various in different countries, and must depend entirely upon the powers of production, and upon the manner in | which the taxes are raised in each country. As great powers of production are neither likely to be called into action, or, when once in action, kept in activity without great consumption, I feel very little doubt that instances have practically occurred of national wealth being greatly stimulated by the consumption of those who have been supported by taxes. Yet taxation is a stimulus so liable in every way to abuse, and it is so absolutely necessary for the general interests of society to consider private property as sacred, that one should be extremely cautious of trusting to any government the means of making a different distribution of wealth, with a view to the general good. But when, either from necessity or error, a different distribution has taken place, and the evil, as far as it regards private property, has actually been committed, it would surely be most unwise to attempt, at the expense of a great temporary sacrifice, a return to the former distribution, without very fully considering whether, if it were effected, it would be really advantageous; that is, whether, in the actual circumstances of the country, with reference to its powers of production, more would not be lost by the want of consumption than gained by the diminution of taxation.(297)
[If distribution be a necessary element of wealth, it would be rash to affirm, that the abolition of a national debt must certainly increase wealth and employ the people.
If the powers of production in a well peopled country were tripled, the greatest difficulty would be the means of distribution; and it would depend upon the circumstance of proper means of distribution being found, whether the increased powers were a great good, or a great evil.
It may be a question, whether, with the great powers of production possessed by this country, and with its actual division of property in land, the same stimulus could be given to the increase of wealth, without the distribution occasioned by a national debt.
Still there are serious evils belonging to a national debt. It is both a cumbersome and a dangerous instrument of distribution.]
A third objection to such a debt is, that it greatly aggravates the evils arising from changes in the value of money. When the currency falls in value, the an-|nuitants, as owners of fixed incomes, are most unjustly deprived of their proper share of the national produce; when the currency rises in value, the pressure of the taxation necessary to pay the interest of the debt, may become suddenly so heavy as greatly to distress the productive classes;* and this kind of sudden pressure must very much enhance the insecurity of property vested in public funds.
[On these accounts it might be desirable to diminish the debt, and discourage its growth in future; but after being accustomed to a great consumption, we cannot recede without passing through a period of great distress.]
It is, I know, generally thought that all would be well, if we could but be relieved from the heavy burden of our debt. And yet I feel perfectly convinced that, if a spunge could be applied to it to-morrow, and we could put out of our consideration the poverty and misery of the public creditors, by supposing them to be supported comfortably in some other country, the rest of the society, as a nation, instead of being enriched, would be impoverished. It is the greatest mistake to suppose that the landlords and capitalists would either at once, or in a short time, be prepared for so great an additional consumption as such a change would require; and if they adopted the alternative suggested by Mr. Ricardo in a former instance, of saving, and lending their increased incomes, the evil would be aggravated tenfold. The new distribution of produce would diminish the demand for the results of productive labour; and if, in addition to this, more revenue were converted into capital, profits would fall to nothing, and a much greater quantity of capital would emigrate, or be destroyed at home, and a much greater number of persons would be starving for want of employment, than before the extinction of the debt.
[The landlords would probably employ more menial servants, and this would be the best remedy that in the actual circumstances could be applied; but the structure of society would be greatly deteriorated by the change.]
With regard to the capitalists, though they would be relieved from a great portion of their taxes, yet there is every probability that their habits of saving, combined with the diminution in the number of effective demanders, would occasion such a fall in the prices of commodities as greatly to diminish that part of the national income which depends | upon profits; and I feel very little doubt that, in five years from the date of such an event, not only would the exchangeable value of the whole produce, estimated in domestic and foreign labour, be decidedly diminished, but a smaller absolute quantity of corn would be grown, and fewer manufactured and foreign commodities would be brought to market than before.(298)
[A country with land, labour, and capital, has certainly the power of recovering from this state of things; but it would have passed through a period of great stagnation; and finally a considerable body of unproductive labourers may be absolutely necessary to call forth its resources.]
It has been repeatedly conceded, that the pro-|ductive classes have the power of consuming all that they produce; and, if this power were adequately exercised, there might be no occasion, with a view to wealth, for unproductive consumers. But it is found by experience that, though there may be the power, there is not the will; and it is to supply this will that a body of unproductive consumers is necessary. Their specific use in encouraging wealth is, to maintain such a balance between produce and consumption as to give the greatest exchangeable value to the results of the national industry. (299) If unproductive labour were to predominate, the comparatively small quantity of material products brought to market would keep down the value of the whole produce, from the deficiency of quantity. If the productive classes were in excess, the value of the whole produce would fall from excess of supply. It is obviously a certain proportion between the two which will yield the greatest value, and command the greatest quantity of domestic and foreign labour; (300) and we may safely conclude that, among the causes necessary to that distribution, which will keep up and increase the exchangeable value of the whole produce, we must place the maintenance of a certain body of unproductive consumers. This body, to make it effectual as a stimulus to wealth, and to prevent it from being prejudicial, as a clog to it, should vary in different countries, and at different times, according to the powers of production; and the most favourable result evidently depends upon | the proportion between productive and unproductive consumers, being best suited to the natural resources of the soil, and the acquired tastes and habits of the people.
It has been already shewnA body of unproductive labourers2 are just as necessary and as useful with a view to future production,3 as a fire, which should consume in the manufacturers warehouse the goods which those unproductive labourers would otherwise4 consume.
What the proportion isI should find no difficulty to determine. They may be useful for other purposes but not in any degree for the production of wealth.
With regard to unproductive &c.In what way can a man’s consuming my produce, without making me any return whatever, enable me to make a fortune? I should think my fortune would be more likely to be made, if the consumer of my produce returned me an equivalent value.
It has been laid down &c.I believe this to be absolutely true, but supposing it false of what advantage can it be to me that another man who returns nothing to me shall consume my goods? How does such a consumption enable me to realize profits?
I cannot express in language so strong as I feel it my astonishment at the various propositions advanced in this section.
To enable the capitalists to continue their habits of saving says Mr. Malthus “they must either consume more or produce less.”
Mr. Ricardo frequently speaks, as if saving were an end instead of a meansWhere? I have no recollection of having done so in any one instance.
If however commodities &c.How can unproductive consumption increase profits? Commodities consumed by unproductive consumers are given to them, not sold for an equivalent. They have no price—how can they increase profits?
Mr. Malthus has defined demand to be the will and power to consume. What power has an unproductive consumer? Will the taking 100 pieces of cloth from a clothiers manufactory, and clothing soldiers and sailors with it, add to his profits? Will it stimulate him to produce?—yes, in the same way as a fire would.
But surely it is a glaringThe limit is not exactly the difficulty of procuring food, but the difficulty of procuring labour in which the difficulty of procuring food is included—for if you came to an end of your power of procuring food you would not long be able to increase your supply of1 labour.
Let a sufficient consumptionThis is all that I contend for. But how capital and population should be both redundant while you can increase the supply of necessaries I am at a loss to conceive. It is a contradiction in terms, it is saying there is a capital unemployed because its owner2 cannot find labourers, and there are people unemployed because there is no one having a capital to employ them.
We might just as well say, bread cannot be sold because there are no purchasers, and at the same time there are men who are starving and who have the means and the will of purchasing bread but there is none to be had—both propositions cannot be true.
The main part of the questionThis3 is true. I agree with Mr. Malthus “that the difficulty relates to the power of calling forth the exertions necessary to acquire the means of expenditure.” But what is this but saying that a man must produce before he can be entitled to consume, and the difficulty is to induce him to produce—there will be none in inducing him to consume after he has produced.
But if, from the want &c.Here Mr. Malthus’s anxiety is not about securing consumption, he is afraid only that without it, there will not be sufficient motive for future production. No mischief can arise then immediately from non-consumption but only remotely as weakening the motive to exertion.
As I have before saidWhy not? I may employ 20 workmen to furnish me food and necessaries for 25, and then these 25 to furnish me food and necessaries for 30—these 30 again to provide for a greater number. Should I not get rich although I employed capital “merely for the sake of the demand occasioned by those who work for me[”]?
It is most desirable &c.Nothing can be more just than the observation “that a great increase of consumption among the working classes must greatly increase the cost of production, it must lower profits, and diminish or destroy the motive to accumulate, before agriculture, manufactures and commerce have reached any considerable degree of prosperity.” But would the consumption of the unproductive class remedy this. What is the consumption of the productive class over and above what is a reasonable reward for their labour, but unproductive consumption,—consumption without an adequate return?
“If each labourer were actually to consume double the quantity of corn which he does at present, such a demand, instead of giving a stimulus to wealth, would probably throw a great quantity of land out of cultivation, and greatly diminish both internal and external commerce.” If it had that effect would it be for any other reason than because one half of this consumption would be unproductive consumption? And yet this is the very consumption that Mr. Malthus thinks so essential to the progress of wealth.
There is certainly howeverThat the labourers will have too little and not too much is indeed the great danger to be apprehended and if possible1 guarded against.
The effect therefore on national wealthThis argument in favour of taxation is quite consistent with Mr. Malthus opinion of the advantages resulting from unproductive consumption.
Mr. Malthus is a most powerful ally of the Chancellor of the Exchequer.1
And I feel very little doubtI should think Mr. Malthus must be the only man in England who would expect such effects from such a cause.
Their specific use in encouragingHow can they by their consumption give value to the results of the national industry? It might as justly be contended that an earthquake which overthrows my house and buries my property, gives value to the national industry.
It is obviouslyMr. Malthus often estimates value by the command which it gives us over foreign as well as domestic labour. What have we to do with the quantity or the value of foreign labour. Every foreign commodity is bought with a quantity of our domestic labour, and by that only must we value both home and foreign commodities.
Application of some of the preceding Principles to the Distresses of the Labouring Classes, since 1815, with general Observations
[The distresses of the labouring classes have been attributed to deficient capital. The capital may be deficient compared with the population, and yet not deficient compared with the effective demand for it.
If one fourth of the capital of a country were suddenly destroyed, or transported to a different part of the world, profits would be high and saving would be the remedy required.]
On the other hand, if the capital of the country were diminished by the failure of some branches | of trade, which had before been very prosperous, and absorbed a great quantity of stock; or even if capital were suddenly destroyed, and from peculiar circumstances a period were to succeed of diminished consumption and slack demand, the state of things, with the exception of the distresses of the poor, would be almost exactly reversed. The remaining capitalists would be in no respect benefited by events which had diminished demand in a still greater proportion than they had diminished capital. Commodities would be every where cheap. Capital would be seeking employment, but would not easily find it; and the profits of stock would be low. There would be no pressing and immediate demand for capital, because there would be no pressing and immediate demand for commodities; and, under these circumstances, the saving from revenue to add to capital, instead of affording the remedy required, would only aggravate the distresses of the capitalists, and fill the stream of capital which was flowing out of the country. The distresses of the capitalists would be aggravated, just upon the same principle as the distresses of the labouring classes would be aggravated, if they were encouraged to marry and increase, after a considerable destruction of people, although accompanied by a still greater destruction of capital which had kept the wages of labour very low. There might certainly be a great deficiency of population, compared with the territory and powers of the country, and it might be very desirable that it should be greater; but if the wages of labour | were still low, notwithstanding the diminution of people, to encourage the birth of more children would be to encourage misery and mortality rather than population.(301)
Now I would ask, to which of these two suppositions does the present state of this country bear the nearest resemblance? Surely to the latter. That a great loss of capital has lately been sustained, is unquestionable. During nearly the whole of the war, owing to the union of great powers of production with great consumption and demand, the prodigious destruction of capital by the government was much more than recovered. To doubt this would be to shut our eyes to the comparative state of the country in 1792 and 1813. The two last years of the war were, however, years of extraordinary expense, and being followed immediately by a period marked by a very unusual stagnation of demand, the destruction of capital which took place in those years was not probably recovered. But this stagnation itself was much more disastrous in its effects upon the national capital, and still more upon the national revenue, than any previous destruction of stock. It commenced certainly with the extraordinary fall in the value of the raw produce of the land, to the amount, it is supposed, of nearly one third. When this fall had diminished the capitals of the farmers, and still more the revenues both of landlords and farmers, and of all those who were otherwise connected with the land, their power of purchasing manufactures and foreign products was of necessity greatly diminished. The | failure of home demand filled the warehouses of the manufacturers with unsold goods, which urged them to export more largely at all risks. But this excessive exportation glutted all the foreign markets, and prevented the merchants from receiving adequate returns; while, from the diminution of the home revenues, aggravated by a sudden and extraordinary contraction of the currency, even the comparatively scanty returns obtained from abroad found a very insufficient domestic demand, and the profits and consequent expenditure of merchants and manufacturers were proportionably lowered. While these unfavourable changes were taking place in rents and profits, the powerful stimulus which had been given to population during the war continued to pour in fresh supplies of labour, and, aided by the disbanded soldiers and sailors and the failure of demand arising from the losses of the farmers and merchants, reduced generally the wages of labour, and left the country with a generally diminished capital and revenue;—not merely in proportion to the alteration of the value of the currency, but in reference to the bullion value of its produce, and the command of this bullion value over domestic and foreign labour. (302) For the four or five years since the war, on account of the change in the distribution of the national produce, and the want of consumption and demand occasioned by it, a decided check has been given to production, and the population, under its former impulse, has increased, not only faster than the demand for labour, but faster than the actual pro-|duce; yet this produce, though decidedly deficient, compared with the population, and compared with past times, is redundant, compared with the effectual demand for it and the revenue which is to purchase it. Though labour is cheap, there is neither the power nor the will to employ it all; because not only has the capital of the country diminished, compared with the number of labourers, but, owing to the diminished revenues of the country, the commodities which those labourers would produce are not in such request as ensure tolerable profits to the reduced capital.(303)
[But when profits are low, and capital is on that account flowing out of the country; to encourage saving, is like the policy of encouraging marriage when the population is starving and emigrating.
Our present low profits have been attributed to the cultivation of poor land, heavy taxation, and restrictions on commerce; but it is difficult to admit a theory of our distresses inconsistent with the theory of our prosperity.
Whatever may be the final tendency of these causes; yet as the country was more than usually prosperous when they prevailed in a greater degree than at present, we must look elsewhere for the immediate sources of the existing distress.]
How far our artificial system, and particularly the changes in the value of our currency operating upon a large national debt, may have aggravated | the evils we have experienced, it would be extremely difficult to say. But I feel perfectly convinced that a very considerable portion of these evils might be experienced by a nation without poor land in cultivation, without taxes, and without any fresh restrictions on trade.(304)
If a large country, of considerable fertility, and sufficient inland communications, were surrounded by an impassable wall, we all agree that it might be tolerably rich, though not so rich as if it enjoyed the benefit of foreign commerce. Now, supposing such a country gradually to indulge in a considerable consumption, to call forth and employ a great quantity of ingenuity in production, and to save only yearly that portion of its revenue which it could most advantageously add to its capital, expending the rest in consumable commodities and unproductive labour, it might evidently, under such a balance of produce and consumption, be increasing in wealth and population with considerable rapidity. But if, upon the principle laid down by M. Say, that the consumption of a commodity is a diminution of demand, the society were greatly and generally to slacken their consumption, and add to their capitals, there cannot be the least doubt, on the great principles of demand and supply, that the profits of capitalists would soon be reduced to nothing, though there were no poor land in cultivation; and the population would be thrown out of work and would be starving, although without a single tax, or any restrictions on trade. (305) |
The state of Europe and America may perhaps be said, in some points, to resemble the case here supposed; and the stagnation which has been so generally felt and complained of since the war, appears to me inexplicable upon the principles of those who think that the power of production is the only element of wealth, and who consequently infer that if the powers of production be increased, wealth will certainly increase in proportion. Now it is unquestionable that the powers of production were increased by the cessation of war, and that more people and more capital were ready to be employed in productive labour; but notwithstanding this obvious increase in the powers of production, we hear every where of difficulties and distresses, instead of ease and plenty. In the United States of America in particular, a country of extraordinary physical resources, the difficulties which have been experienced are very striking, and such certainly as could hardly have been expected. These difficulties, at least, cannot be attributed to the cultivation of poor land, restrictions upon commerce, and excess of taxation. (306) Altogether the state of the commercial world, since the war, clearly shews that something else is necessary to the continued increase of wealth besides an increase in the power of producing.
That the transition from war to peace, of which so much has been said, is a main cause of the effects observed, will be readily allowed, but not as the operation is usually explained. It is generally said that there has not been time to transfer | capital from the employments where it is redundant to those where it is deficient, and thus to restore the proper equilibrium. But I cannot bring myself to believe that this transfer can require so much time as has now elapsed since the war; and I would again ask, where are the under-stocked employments, which, according to this theory, ought to be numerous, and fully capable of absorbing all the redundant capital, which is confessedly glutting the markets of Europe in so many different branches of trade? It is well known by the owners of floating capital, that none such are now to be found; and if the transition in question is to account for what has happened, it must have produced some other effects besides that which arises from the difficulty of moving capital. This I conceive to be a great diminution of the whole amount of consumption and demand. The necessary changes in the channels of trade would be effected in a year or two; but the general diminution of consumption and demand, occasioned by the transition from such a war to a peace, may last for a very considerable time. The returned taxes, and the excess of individual gains above expenditure, which were so largely used as revenue during the war, are now in part, and probably in no inconsiderable part, saved. I cannot doubt, for instance, that in our own country very many persons have taken the opportunity of saving a part of their returned property-tax, particularly those who have only life-incomes, and who, contrary to the principles of just taxation, | had been assessed at the same rate with those whose incomes were derived from realized property. This saving is quite natural and proper, and forms no just argument against the removal of the tax; (307) but still it contributes to explain the cause of the diminished demand for commodities, compared with their supply since the war. If some of the principal governments concerned spent the taxes which they raised in a manner to create a greater and more certain demand for labour and commodities, particularly the former, than the present owners of them, and if this difference of expenditure be of a nature to last for some time, we cannot be surprised at the duration of the effects arising from the transition from war to peace.
[This diminished consumption must have operated very differently in different countries. Some it must have relieved, others it has distressed. Those which suffered the least by the war have suffered the most by the peace.
The distress which has attended the peace is an unfortunate association; but it should be recollected that it has arisen from peculiar circumstances, which in the same degree are not necessarily connected with the termination of a war.
On account of the evils likely to be felt from a sudden diminution of consumption, the policy which has often been recommended of raising the supplies for a war within each year may fairly be doubted.]
If the country were poor, such a system of taxation might completely keep down its efforts. It might every year positively diminish its capital, and render it every year more ruinous to furnish the same supplies; (308) till the country would be obliged to submit to its enemies from the absolute inability of continuing to oppose them with effect. On the other hand, if the country were rich, and had great powers of production, which were likely | to be still further called forth by the stimulus of a great consumption, it might be able to pay the heavy taxes imposed upon it, out of its revenue, and yet find the means of adequate accumulation; but if this process were to last for any time, and the habits of the people were accommodated to this scale of public and private expenditure, it is scarcely possible to doubt that, at the end of the war, when so large a mass of taxes would at once be restored to the payers of them, the just balance of produce and consumption would be completely destroyed, and a period would ensue, longer or shorter, according to circumstances, in which a very great stagnation would be felt in every branch of productive industry, attended by its usual concomitant general distress.
[Although it is necessary to save, in order to recover the capital which the country has lost; yet if profits are low and uncertain, saving is not the first step wanted.
What the country wants is an increased national revenue, or an increase of the exchangeable value of the whole produce. When this has been attained we may save with effect.
The question, how this increase of revenue is to be attained, has been attempted to be answered in the latter sections of this chapter.
An increased revenue is not so easily attained as an increased proportion of capital to revenue.]
Still, however, it is of the utmost importance to know the immediate object which ought to be aimed at; that if we can do but little actually to forward it, we may not, from ignorance, do much to retard it. With regard to the first main cause | which I have mentioned, as tending to increase the exchangeable value of the national produce, namely the division of landed property, I have given my reasons for thinking that, in the actual and peculiar state of this country, the abolition of the law of primogeniture would produce more evil than good; and there is no other way in which a different division of land could be effected, consistently with an adequate respect for the great fundamental law of property, on which all progress in civilization, improvement, and wealth, must ever depend. But if the distribution of wealth to a certain extent be one of the main causes of its increase, while it is unadvisable directly to interfere with the present division of land in this country, it may justly become a question, whether the evils attendant on the national debt are not more than counterbalanced by the distribution of property and increase of the middle classes of society, which it must necessarily create; and whether by saving, in order to pay it off, we are not submitting to a painful sacrifice, which, if it attains its object, whatever other good it may effect, will leave us with a much less favourable distribution of wealth? (309) By greatly reducing the national debt, if we are able to accomplish it, we may place ourselves perhaps in a more safe position, and this no doubt is an important consideration; but grievously will those be disappointed who think that, either by greatly reducing or at once destroying it, we can enrich ourselves, and employ all our labouring classes. |
[A greater freedom might be given to commerce without diminishing the revenue of the customs. The permanent effects of opening the trade with France would certainly be beneficial.
But in looking forward to changes of this kind, we should attend to the caution given by Adam Smith, which would be particularly applicable to the silk trade.
When the opening of any trade would produce temporary distress, it is because it would diminish for a time the exchangeable value of the whole produce; but, in general, the extension of trade increases it.
A knowledge of the effects of unproductive consumers on national wealth will make us proceed with more caution in our efforts to diminish them.
Public works, the making and repairing of roads, and a tendency among persons of fortune to improve their grounds, and keep more servants, are the most direct means within our power of restoring the demand for labour.]
If by the operation of these three causes, either separately or conjointly, we can make the supply and consumption bear a more advantageous proportion to each other, so as to increase the exchangeable value of the whole produce, the rate of profits may then permanently rise as high as the quality of the soil in cultivation combined with the actual skill of the cultivators will allow,* which is far from being the case at present. And as soon as the capitalist can begin to save from steady and improving profits, instead of from diminished expenditure, that is, as soon as the national revenue, | estimated in bullion, and in the command of this bullion over domestic and foreign labour, begins yearly and steadily to increase, we may then begin safely and effectively to recover our lost capital by the usual process of saving a portion of our increased revenue to add to it.
[It is thought by many that the revenue of the country would be most effectually increased, and the balance of consumption restored, by an abundant issue of paper; but this opinion is founded on a mistaken view of the effects of a depreciated currency.
A great issue of paper now would have a very different effect from that which it had during the war.]
Perhaps a sudden increase of currency and a new facility of borrowing might, under any circumstances, give a temporary stimulus to trade, but it would only be temporary. Without a large expenditure on the part of the government, and a frequent conversion of capital into revenue, the great powers of production acquired by the capitalists, operating upon the diminished power of purchasing possessed by the owners of fixed incomes, could not fail to occasion a still greater glut of commodities than is felt at present; and experience has sufficiently shewn us, that paper cannot support prices under such circumstances. (311) In the history of our paper transactions, it will be found that the abundance or scantiness of currency has followed and aggravated high or low prices, but seldom or never led them; and it is of the utmost importance to recollect that, at the end of the war, the prices failed before the contraction of the currency began. It was, in fact, the failure of prices, which destroyed the country banks, and shewed us the frail foundations on which the excess of our paper-currency rested. This sudden contraction no doubt aggravated very greatly the distresses of the merchants and of the country; and for this very reason we should use our utmost endeavours to avoid such an event in future; not, how-|ever, by vain efforts to keep up prices by forcible issues of paper, in defiance at once of the laws of justice and the great principles of supply and demand, but by the only effectual way, that of steadily maintaining our paper of the same value with the coin which it professes to represent, and subjecting it to no other fluctuations than those which belong to the precious metals.
In reference to the main doctrine inculcated in the latter part of this work, namely, that the progress of wealth depends upon proportions; it will be objected, perhaps, that it necessarily opens the way to differences of opinion relating to these propositions, and thus throws a kind of uncertainty over the science of political economy which was not supposed to belong to it. If, however, the doctrine should be found, upon sufficient examination, to be true; if it adequately accounts for things as they are, and explains consistently why frequent mistakes have been made respecting the future, it will be allowed that such objectors are answered. We cannot make a science more certain by our wishes or opinions; but we may obviously make it much more uncertain in its application, by believing it to be what it is not.
Though we cannot, however, lay down a certain rule for growing rich, and say that a nation will increase in wealth just in the degree in which it saves from its revenue, and adds to its capital: yet even in the most uncertain parts of the science, even in those parts which relate to the proportions of production and consumption, we are not left | without guides; and if we attend to the great laws of demand and supply, they will generally direct us into the right course. It is justly observed by Mr. Ricardo that “the farmer and manufacturer can no more live without profit than the labourer without wages. Their motive for accumulation will diminish with every diminution of profit, and will cease altogether when their profits are so low as not to afford them an adequate compensation for their trouble, and the risk which they must necessarily encounter in employing their capital productively.”* Mr. Ricardo applies this passage to the final and necessary fall of profits occasioned by the state of the land. I would apply it at all times, throughout all the variable periods which intervene between the first stage of cultivation and the last. Whenever capital increases too fast, the motive to accumulation diminishes, and there will be a natural tendency to spend more and save less. When profits rise, the motive to accumulation will increase, and there will be a tendency to spend a smaller proportion of the gains, and to save a greater. These tendencies, operating on individuals, direct them towards the just mean, which they would more frequently attain if they were not interrupted by bad laws or unwise exhortations. If every man who saves from his income is necessarily a friend to his country, it follows that all those who spend their incomes, though they may | not be absolute enemies, like the spendthrift, must be considered as failing in the duty of benefiting their country, and employing the labouring classes, when it is in their power; and this cannot be an agreeable reflection to those whose scale of expenditure in their houses, furniture, carriages and table, would certainly admit of great retrenchment, with but little sacrifice of real comfort. But if, in reality, saving is a national benefit, or a national disadvantage, according to the circumstances of the period; and, if these circumstances are best declared by the rate of profits, surely it is a case in which individual interest needs no extraneous assistance.(312)
Saving, as I have before said, is, in numerous instances, a most sacred private duty. How far a just sense of this duty, together with the desire of bettering our condition so strongly implanted in the human breast, may sometimes, and in some states of society, occasion a greater tendency to parsimony than is consistent with the most effective encouragement to the growth of public wealth, it is difficult to say; but whether this tendency, if let alone, be ever too great or not, no one could think of interfering with it, even in its caprices. There is no reason, however, for giving an additional sanction to it, by calling it a public duty. The market for national capital will be supplied, like other markets, without the aid of patriotism. And in leaving the whole question of saving to the uninfluenced operation of individual interest and individual feelings, (313) we shall best conform to | that great principle of political economy laid down by Adam Smith, which teaches us a general maxim, liable to very few exceptions, that the wealth of nations is best secured by allowing every person, as long as he adheres to the rules of justice, to pursue his own interest in his own way.
[Though the science of Political Economy must, from its nature, resemble more the science of morals or of politics than that of mathematics, yet if its principles be founded on a sufficiently extended experience, they will rarely in their application disappoint our just expectations.]
There is another objection which will probably be made to the doctrines of the latter part of this work, which I am more anxious to guard against. If the principles which I have laid down be true, it will certainly follow that the sudden removal of taxes will often be attended with very different effects, particularly to the labouring classes of society, from those which have been generally ex-|pected. And an inference may perhaps be drawn from this conclusion in favour of taxation. But the just inference from it is, that taxes should never be imposed, nor to a greater amount, than the necessity of the case justifies, and particularly that every effort should be made, consistently with national honour and security, to prevent a scale of expenditure so great that it cannot proceed without ruin, and cannot be stopped without distress.(314)
Even if it be allowed that the excitement of a prodigious public expenditure, and of the taxation necessary to support it, operating upon extraordinary powers of production, might, under peculiar circumstances, increase the wealth of a country in a greater degree than it otherwise would have increased; yet, as the greatest powers of production must finally be overcome by excessive borrowing, and as increased misery among the labouring classes must be the consequence, whether we go on or attempt to return, it would surely have been much better for the society if such wealth had never existed. It is like the unnatural strength occasioned by some violent stimulant, which, if not absolutely necessary, should be by all means avoided, on account of the exhaustion which is sure to follow it.(315)
[It is the duty of governments to avoid war if possible; but if it be unavoidable, so to regulate the expenditure as to produce the least fluctuation of demand.
Other classes are often relieved by the taking off of taxes; but nothing can compensate to the labouring classes the want of demand for labour.
To state these facts is not to favour taxes, but to bring forward additional reasons against imposing them without a strong necessity.
The labouring classes suffer more from low wages in adversity than they are benefited by high wages in prosperity. To them fluctuations are most unfavourable. The interests of the great mass of society require peace and equable expenditure.]
There might certainly beThe evils of a redundant population are fully admitted, but no mistake can be greater than to suppose any evils whatever can result from an1 accumulation of capital. The sole consequences might be an indisposition to accumulate further from the fall of profits, which would arise from the liberal wages which a deficient population could command.
While these unfavourable changes2If the termination of the war, has left the country with a diminished capital and revenue, must not the goods which capital produces have also diminished in quantity? Is not produce now in the same proportion to capital as it was during the war? How does this account for the low price and glut of commodities?3
Yet this produce though decidedly deficient compared with the population, and compared with past times, is redundant compared with the effectual demand for it and the revenue which is to purchase it.Labour is paid by commodities. Commodities are much too abundant for the effectual demand, and yet with these commodities you cannot employ more labour, because they are1 deficient compared with the population. Is not this saying that commodities are abundant and deficient at the same time?
But I feel perfectly convincedSo do I, because I feel perfectly convinced, that without those evils, stagnation in trade, after such a war, and with great temptation to capital to leave a country where profits are comparatively low will produce much distress.
But if upon the principle laid down by M. Say &c.How could the society generally slacken their consumption, and add to their capitals? Does adding to capital in any case slacken consumption? Without slackening consumption how could the population be thrown out of work, and be starving?
These difficulties, at leastA country may suffer by restrictions on trade, although it does not impose the restrictions itself.
This saving is quite natural and proper and forms no just argument against the removal of the tax.If Mr. Malthusâ€™s reasoning be correct it forms an irresistible argument against the removal of the tax. Can any conclusion be more at variance with the premises?
It might every year positively diminish its capital; and render it every year more ruinous to furnish the same supplies.Do not loans every year positively diminish the capital of the country?
But if the distribution of wealthHow does the national debt create the middle classes of society? Must not every holder of stock have been possessed of the same amount of property before he became a stockholder? Would he not then have been in the middle class of society if there had been no national debt? I cannot conceive how the Natl debt can have created any of this class. If again we pay it off, do we annihilate this middle class as Mr. Malthus appears to fear we should do? Will not every stockholder be in possession of a capital after payment of the debt.1
The profits of Stock &c.Mr. Malthus is greatly mistaken if he supposes that I contend profits must always be high while we have fertile land still in reserve. Profits will be low as I have said a hundred times if wages are high, and wages may be very high, with very abundant resources in land.
Without a large expenditure on the part of Government &c. &c.Here are Mr. Malthusâ€™s peculiar opinions fairly avowed.
Mr. Ricardo applies this passageHere again Mr. Malthus has mistaken me and I refer to his own account of my opinions in Page 1 to shew that this is not my doctrine, but the one which he supposes me without any just ground to hold.
Mr. Malthus never appears to remember that to save is to spend, as surely, as what he exclusively calls spending.
And in leaving the whole question of saving &c. &c.Who has ever proposed to leave it to any other?
But the just inference from it isBut another just inference is that if once laid, they must not be taken off; and it also follows that it would often be wise to impose them. If the people will not expend enough themselves, what can be more expedient than to call upon the state to spend for them? What could be more wise if Mr. Malthus doctrine be true than to increase the army, and double the salaries of all the officers of Government?
It is like the unnaturalBut we are under the influence of the stimulant, and are suffering from the folly of discontinuing it. My principles lead to quite opposite conclusions. The annihilation of the national debt either by paying it from the capital of the country, or by refusing to pay the stockholder either principal or interest, would not have the effects generally attributed to them.
After the annihilation of the debt we should have no more capital or revenue than before, it would only be differently distributed. Inasmuch as the payment of the debt would relieve us from a great load of taxation, it would diminish the temptation to remove capital from this country, to others, not so burthened. It would relieve us from the army of tax gatherers, revenue officers, and smugglers who are now supported out of the industry of the country, and which aggravates the evil of the taxes. Many other collateral benefits would result, which it would not be expedient now to enumerate.1
[* ]See Lord Lauderdale’s Chapter on Parsimony, in his Inquiry into the Nature and Origin of Public Wealth, ch. iv. p. 198. 2d. edit. Lord Lauderdale appears to have gone as much too far in deprecating accumulation, as some other writers in recommending it. This tendency to extremes is exactly what I consider as the great source of error in political economy.
[* ]Mr. Mill, in a reply to Mr. Spence, published in 1808, has laid down very broadly the doctrine that commodities are only purchased by commodities, and that one half of them must always furnish a market for the other half. The same doctrine appears to be adopted in its fullest extent by the author of an able and useful article on the Corn Laws, in the Supplement to the Encyclopaedia Britannica, which has been referred to in a previous chapter.
[* ]Princ. of Polit. Econ. ch. xxi. p. [292–3]. 2d edit.
[† ]Edinburgh Review, No. LXIV. p. 471.
[* ]Princ. of Polit. Econ. chap. xxi. p. . 2d edit.
[* ]Theoretical writers in Political Economy, from the fear of appearing to attach too much importance to money, have perhaps been too apt to throw it out of their consideration in their reasonings. It is an abstract truth that we want commodities, not money. But, in reality, no commodity for which it is possible to | sell our goods at once, can be an adequate substitute for a circulating medium, and enable us in the same manner to provide for children, to purchase an estate, or to command labour and provisions a year or two hence. A circulating medium is absolutely necessary to any considerable saving; and even the manufacturer would get on but slowly, if he were obliged to accumulate in kind all the wages of his workmen. We cannot therefore be surprized at his wanting money rather than other goods; and, in civilized countries, we may be quite sure that if the farmer or manufacturer cannot sell his products so as to give him a profit estimated in money, his industry will immediately slacken. The circulating medium bears so important a part in the distribution of wealth, and the encouragement of industry, that to set it aside in our reasonings may often lead us wrong.
[* ]Edinburgh Review, No. LXIV. p. 471.
[† ]Of all the opinions advanced by able and ingenious men which I have ever met with, the opinion of Mr. Say, which states that, un produit consomme´ ou de´truit est un de´bouche´ ferme´ (l. i. ch. | 15.) appears to me to be the most directly opposed to just theory, and the most uniformly contradicted by experience. Yet it directly follows from the new doctrine, that commodities are to be considered only in their relation to each other,—not to the consumers. What, I would ask, would become of the demand for commodities, if all consumption except bread and water were suspended for the next half year? What an accumulation of commodities! Quels de´bouche´s! What a prodigious market would this event occasion!
[† ]The reader must already know, that I do not share in the apprehensions of Mr. Owen about the permanent effects of machinery. But I am decidedly of opinion, that on this point he has the best of the argument with those who think that accumulation ensures effective demand.
[* ]In Norway and Sweden, particularly the former, where the agricultural labourer either lives in the farmer’s family or has a portion of land assigned to him in lieu of wages, he is in general pretty well fed, although there is but little demand for labour, and considerable competition for such employment. In countries so circumstanced, (and there are many such all over the world,) it is perfectly futile to attempt to estimate profits by the excess of the produce above what is consumed in obtaining it, when for this excess there may be often little or no market. All evidently depends upon the exchangeable value of the disposable produce.
[* ]Capital is withdrawn only from those employments where it can best be spared. It is hardly ever withdrawn from agriculture. Nothing is more common, as I have stated in the Chapter on Rent, than increased profits, not only without any capital being withdrawn from the land, but under a continual addition to it. Mr. Ricardo’s assumption of constant prices would make it absolutely impossible to account theoretically for things as they are. If capital were considered as not within the pale of demand and supply, the very familiar event of the rapid recovery of capital during a war would be quite inexplicable.
[* ]Ricardo’s Princ. of Polit. Econ. ch. xxi. p. . 2d. edit.
[* ]Susmilch, vol. iii. p. 60. Essay on Population, vol. i. p. 459. edit. 5th. In foreign states very few persons live in the country who are not engaged in agriculture; but it is not so in England.
[† ]Population Abstracts, 1811.
[* ]Essai Politique sur la Nouvelle Espagne, tom. iii. l. iv. c. ix. p. 28.
[† ]Nouvelle Espagne, tom. iii. l. iv. c. ix. p. 36.
[‡ ]Nouvelle Espagne, tom. iii. liv. iv. c. ix. p. 12.
[* ]Tom. ii. l. iii. c. viii. p. 342.
[† ]Tom. iii. l. iv. c. ix. p. 89.
[* ]Essays, vol. i. p. 293.
[* ]Chap. ii. sect. vii.
[* ]Princ. of Polit. Econ. ch. xx. p. .
[* ]Sect. III. of this chapter.
[* ]From what has been here said, the reader will see that I can by no means agree with Mr. Ricardo, in his chapter On Gross and Net Revenue. I should not hesitate a moment in saying, that a country with a neat revenue from rents and profits, consisting of food and clothing for five millions of men, would be decidedly richer and more powerful, if such neat revenue were obtained from seven millions of men, rather than five, supposing them to be equally well supported. The whole produce would be greater; and the additional two millions of labourers would some of them unquestionably have a part of their wages disposable.(257) But I would further ask what is to become of the capital as well as the people in the case of such a change? It is obvious that a con-|siderable portion of it must become redundant and useless. I quite agree with Mr. Ricardo, however, in approving all saving of labour and inventions in machinery; but it is because I think that their tendency is to increase the gross produce and to make room for a larger population and a larger capital. If the saving of labour were to be accompanied by the effects stated in Mr. Ricardo’s instance, I should agree withM. Sismondi and Mr. Owen in deprecating it as a great misfortune.
[† ]This, however, will not necessarily happen. The greater temptation offered to consumption may induce some persons to spend what they otherwise would have saved, and in many cases the wealth of the country, instead of suffering by this change, will gain by it. The increased consumption, as far as it goes, will occasion an increase of market prices and profits. The increase of | profits will soon restore the capital which for a short time had been diverted from its destined office; and the country will be left with habits of greater consumption, and at the same time with proportionate means of supplying them.
[* ]Princ. of Polit. Econ. c. vii. p. . 2d edit.
[* ]Princ. of Pol. Econ. ch. vii. p. . 2d edit.
[* ]Wealth of Nations, Vol. ii. B. ii. ch. ii. p. 19. 6th edit.
[* ]The effect of obliging a cultivator of a certain portion of rich land to maintain two men and two horses for the state, might in some cases only induce him to cultivate more, and create more wealth than he otherwise would have done, while it might leave him personally as rich as before, and the nation richer; but if the same obligation were to be imposed on the cultivator of an equal quantity of poor land, the property might be rendered at once not worth working, and the desertion of it would be the natural consequence. An indiscriminate and heavy tax on gross produce might immediately scatter desolation over a country, capable, under a better system, of producing considerable wealth.
[* ]In a country with a large public debt, there is no duty which ought to be held more sacred on the part of the administrators of the government than to prevent any variations of the currency beyond those which necessarily belong to the varying value of the precious metals. I am fully aware of the temporary advantages which may be derived from a fall in the value of money; and perhaps it may be true that a part of the distress during the last year, though I believe but a small part, was occasioned by the measure lately adopted, for the restoration of the currency to its just value. But some such measure was indispensably necessary; and Mr. Ricardo deserves the thanks of his country for having suggested one which has rendered the transition more easy than could reasonably have been expected.
[* ]The profits of stock cannot be higher than the state of the land will allow, but they may be lower in any degree. (see p. 300.) The great difference between Mr. Ricardo and me on this point is, that Mr. Ricardo thinks profits are regulated by the state of the land; I think they are only limited by it one way, and that if capital be abundant, compared with the demand for commodities, profits may be low in any degree, in spite of the fertility of the land. (310)
[* ]Princ. of Polit. Econ. ch. vi. p. .
‘in the same proportion as capital’ is inserted.
Replaces ‘or if it does’.
‘and profits so low in consequence’ is ins.
‘the capitalist’ is ins.
Replaces ‘Now a dispute about increasing productions by saving is one thing, and about the motives for increasing them another.’
First written simply ‘; but also the wages of the labourer.’
‘in certain proportions to be agreed upon’ is deleted here.
Traité d’Économie politique, 4th ed., 1819, p. 122.
Replaces ‘in confining our enquiries to’.
The remainder of the paragraph replaces ‘employed.’
‘in such case’ is del. here.
The preceding paragraph and the first part of this paragraph replace: ‘It is not true that those labourers would be most productive, the operations of whom were most assisted by capital, or the results of previous labour; because if I employ 100 men and £10,000 capital I must have returned to me all that the 100 men destroy, and the profits on the £10,000 capital in the value of the commodities produced. If I employ 2,000 men and £10,000 capital I must have what the 2,000 men consume and the profits on £10,000 capital. Mr. Malthus appears to think that the value of the return will be in proportion to the capital employed—the labourers must return a commodity not only of the value of the’ etc.
‘all’ replaces ‘directly’.
‘as’ replaces ‘into’.
Replaces ‘If he answer, no, I trust he will find few to agree with him.’
Replaces ‘his profit, as the value of the goods, is to be realized.’
‘given’ replaces ‘very small’.
Blank in MS: according to Humboldt, as quoted by Malthus,p. 382, twenty five. Humboldt, however, says nothing about the quantity of labour.
‘and with the same quantity of labour’ is ins.
The remainder of this sentence replaces ‘by the same number of men in England’.
Replaces ‘of equal value’.
‘variations’ replaces ‘value’.
‘standard’ is ins.
The last three paragraphs, beginning ‘And on what’, are ins.
‘a certain’ replaces ‘the’.
Blank in MS: ‘cloth’ is mentioned below.
Malthus’s p. 61; above, pp. 30–31.
The Note originally ended here; the remainder is ins.
‘and the respective quantities will be represented by their cost, at the same time and place’ is deleted here.
A remark pencilled by Ricardo on the margin, and then rubbed out, is faintly legible: ‘I do not say a commodity will be worth its cost in labour, but in proportion to its cost in labour.’ Cp. Principles, ed. 3, above, I, 47, n.
‘natural’ is written above ‘just’, which however is not deleted.
‘at the usual rate,’ is del. here.
‘produce it and’ is ins.
‘real’ is ins.
‘relative’ is ins.
i.e. Note (9) above.
Wealth of Nations, Bk. 1, ch. vii; Cannan’s ed., vol. 1, p. 57.
The remainder of the sentence replaces ‘yet it is in consequence of this difference in the fertility of the land on which this corn is grown and the fertility of that on which the corn is grown from which the other loaf is made, and which regulates the value of all corn that rent is paid.’
‘compensation for’ is ins.
Last nine words are ins.
Last nine words are ins.
The following passage is del. here: ‘but they are not applicable to any other commodity but paper money. Money is not consumed.’
Last nine words are ins.
‘I think it is not regulated by supply and demand.’ is del. here.
‘value of the’ is ins.
Replaces ‘by the demand and supply’.
Replaces ‘upon the demand for or supply of’.
Replaces ‘depends on’.
Last two sentences are ins.
‘exchangeable’ is ins.
‘comparatively’ is ins.
Malthus’s Grounds of an Opinion, 1815, pp. 38–9 and 41. Ricardo had criticized these opinions of Malthus in his Principles, above, I, 419–420.
This sentence is ins.
‘or the value of a larger proportion,’ is ins.
Last three lines replace ‘that the hatter, the shoemaker, the ironmaster, and every’.
‘after paying rent’ is ins.
‘than before’ replaces ‘of the whole’, which had been ins.
The Note originally ended here; the remainder is ins.
Replaces ‘by a rise of wages’.
Replaces ‘so far from its being true, that a large class of commodities will rise in price, they will do the contrary they will absolutely fall’.
‘in a small proportion’ was first ins. here, and then del.
‘little’ is del. here.
McCulloch criticizes this Note in letter 417 of 22 Jan. 1821; see Ricardo’s reply, letter 418 of 25 Jan., and cp. letter 421. Ricardo considers the converse case in ed. 3 of Principles, above, I, 35 and 43.
The following is del. here: ‘Supposing he had used his own measure of value could he have explained the effects of a rise of wages on relative value—on profits &c.? Would he have come to the same conclusions? Certainly not for if’.
‘denies’ is del. here.
‘under the conditions I have supposed’ is ins.
‘justly’ is ins.
‘nominal’ replaces ‘real’.
MS reads ‘See Remark 72—Page 16½ 17’, referring to the earlier pagination of MS.
‘general’ is ins.
[*]Inquiry into the Nature and Progress of Rent Page 57.
[*]Inquiry into the Nature and Progress of Rent Page 57.
[*]Inquiry into the Nature and Progress of Rent Page 57.
‘a lower’ replaces ‘the same’.
‘low’ replaces ‘lower’, and five words below ‘high’ replaces ‘higher’.
‘existed’ is written in pencil above ‘was offered’, which however is not del.
‘surplus’ is del. here.
Replaces ‘raise double the produce’.
Replaces ‘forgets that the proof of no rent being paid’.
Replaces ‘does not depend [‘only’ is ins. here] on worse lands being taken into cultivation.’
‘some’ here and below, and ‘some of’ further down in this sentence are ins.
‘and’ is replaced by ‘such as’ in the copy sent to Trower on 26 Nov. 1820, letter 403.
‘altho of the same value as a capital which employs labour only,’ is del. here.
‘the quantity’ is ins.
‘the expence of production’ replaces ‘value’.
Above, Note (11), p. 34.
The words that follow the quotation are ins.
‘relatively to one particular commodity’ is ins.
The remainder of the sentence replaces ‘for each.’
In substance, Principles, above, I, 87, n. 1.
This paragraph is ins.
The sentence originally ended here; ‘particularly if measured by corn and labour’ was then ins., and finally it was expanded as above.
‘the quantity of’ replaces ‘the value of’, which had been ins.
Above, I, 145.
The six lines that follow in the Note replace an earlier version, in which the causes enumerated were only two—what is now the second being then merely a clause of the first: ‘is owing to two causes, one, the expences attending the purchase of gold and silver with bulky commodities, if the purchasers possess no others, particularly if the commodities with which the purchase is made must be conveyed to a great distance. In the country importing gold, all that expence, [ins. here: ‘the value of’] all that quantity of labour in fact, must be realized in the gold. [This sentence is replaced by ‘The expences of importing gold must be increased and must therefore raise its value.’] Secondly, the different rate of profits in different countries’ etc.
The remainder of the sentence replaces ‘the intensity of labour.’
Last nine words are ins.
‘: Does not the labour on these constitute’ replaces ‘as not constituting’; and the question-mark at the end replaces a full stop.
This sentence (where the medium is the quantity of labour, as opposed to the value of labour of the preceding sentence) is inserted.
A copy of this Note, with a few variants, was sent by Ricardo to Trower on 26 Nov. 1820, letter 403.
Copy to Trower ‘probably’.
‘obtained’ replaces ‘bestowed’.
Copy to Trower ‘a great’.
Above, p. 34.
‘at all times’ is del. here.
Ch. xxxii, ‘Mr. Malthus’s Opinions on Rent.’
Above, I, 404–9.
Note (51) below.
The remainder of the sentence replaces ‘for them.’
Last eight words are ins.
Last nine words are ins.
First written ‘were not so strong would be permanently’, then revised ‘were not strong would be more or less permanently’, and finally corrected as above.
‘limited’ is here ins.
‘facility’ replaces ‘means’.
‘doubly’ is del. here.
‘what are now called’ is ins.
‘on’ replaces ‘to’.
Principles, above, I, 74–75.
Inquiry into ... Rent, p. 57.
‘really, if well understood,’ is ins.
Above, I, 79–80 and 412; and cp. 81, n. 1.
The phrase is not a slip for ‘of a fact not of an opinion’, as the Johns Hopkins ed. suggests, mistaking Ricardo’s modesty for arrogance.
The first part of this sentence replaces ‘I know full well that I am not deserving of half the kind things which Mr. Malthus says of me, but I know also that I do not merit being held up as the enemy of landlords, or of holding any worse opinion’.
The whole of this Note is ins. Cp. the footnote added in ed. 3 of Ricardo’s Principles, above, I, 404.
The last two lines, beginning ‘and here’, are ins.
‘past’ is del. here.
An earlier version of this Note read: ‘In what medium fallen? Except in corn, and only in that, because corn would rise, the expences of cultivation, including even the fall in profits, would not have fallen.’
‘with’ is written above ‘from’, which however is not del.
‘necessaries and’ is ins.
‘in Mr. Malthus’s medium’ is ins.
‘as compared with’ is del. here.
‘employed’ is ins.
Above, I, 77.
‘To tax the produce of the land is the same thing as to diminish its fertility. Mr. Malthus allows here then that to diminish’ is del. here.
‘though’ replaces ‘however’.
‘the supply of’ is ins.
‘corn’ was ins. here, and then del.
Note (59) above.
‘and improvements in agriculture’ is del. here.
Last nine words are ins.
‘different’ is del. here.
The Note originally ended here; the remainder is ins.
‘in corn produce’ is ins.
Last eleven words, beginning ‘and if’, are ins.
Last sixteen words, beginning ‘and therefore’, are ins.
‘than the population’ replaces ‘than people’.
‘with £100’ is ins.
‘apparent’ is ins.
Replaces ‘command all the necessaries and enjoyments’.
Replaces ‘of all the necessaries and conveniences’.
‘except this one commodity’ is ins.
Replaces ‘to employ an additional capital in manufactures’.
‘, and poorer’ is ins.
‘the’ is del. here.
‘the effects of’ is ins.
Last seven words are ins.
Replaces ‘with the same capital a greater produce’.
Last eight words are ins.
Cp. above, I, 405, n. 2.
Replaces ‘would be lower than before’.
MS, by a mistake, repeats here ‘that’.
First written ‘in the requisite abundance at the old prices—why would it not be the same with corn unless the expences of production became greater?’—then rearranged as above.
‘more than’ is ins.
‘in France and Flanders’ is ins.
Last ten words, beginning ‘in either’, replace ‘neither more nor less will be received’.
‘wheat’ is ins.
The last sentence is ins.
‘expence’ is written above ‘expenditure’, which however is not del.
‘of production,’ is ins.
The remainder of this sentence is ins.
‘but by a fall in the value of money’ was ins. here and subsequently del.
‘first’ was ins. here and then del.
The first part of this paragraph, beginning ‘Suppose’, replaces what was originally a continuation of the preceding paragraph: ‘; commodities rise next, and corn rises still more, on account of the fall in the value of money, which if confined to paper money and not extending to bullion is called depreciation of money. But such a rise is only nominal; if goods rise 20 p.c., the exchange is 20 p.c. against us, bullion is at 20 p.c. premium—so that in all our transactions’ etc.
The last eight words are ins.
‘real fall in the value of paper and partly to a real’ is ins.
‘in substance’ is del. here.
‘partly’ is ins.
Cp. letter 147 to Trower, 25 Dec. 1815.
The whole of this Note, with the exception of the two concluding paragraphs, replaces: ‘In this opinion I fully concur but does it not overturn Mr. Malthus’ theory as explained in the last four pages? What advantages, in exportation, had England which she had not before, in the 20 years from 1793 to 1813 in consequence of being obliged to grow her own corn, that it is to that circumstance Mr. M. ascribes the partial fall in England of the value of money?’
Last seven words are ins.
Replaces ‘a dear’.
‘tax’ is del. here.
The rewritten section ends here.
Cp. Malthus’s p. 167; above, p. 144.
The Note originally opened: ‘This would be a common benefit’, which was del.
‘produce’ is ins.
‘perhaps lower’ is ins.
‘come up to’ is written above ‘keep pace with’, which however is not del.
The last sentence is ins.
Cp. above, I, 417 ff.
‘rents in’ is ins.
First written simply: ‘Produce would be dear because with the diminished capital less would be produced.’
The sentence originally continued ‘and high prices’; this was replaced by ‘and the whole produce of a high value’, which was finally del.
‘(the profits of capital)’ was first ins. here, then del.
The Note originally opened: ‘Who maintains such an absurd doctrine’, which was del.
Replaces ‘The consumers’.
‘Low’ replaces ‘, which’.
The Note originally opened: ‘My conviction is the same.’; this was del.
See Malthus’s p. 149; above, p. 117.
‘a’ replaces ‘another’.
‘No benefit’ is del. here.
‘the last portion of’ is ins.
Replaces ‘As taxation is concerned this doctrine is most important.’
‘in the price’ is ins.
‘even’ is del. here.
Twelve pages of the MS, from here to the end of Note (102), were added later, replacing an original version which (as appears from the gap in the pencil numeration of the sheets) covered only four pages. The pages which contained the original version are wanting.
The original and shorter version of this Note is wanting. See above, p. 171, n. 3.
The following is del. here: ‘Suppose wages to continue the same and rent to fall profits must depend on the value of the produce.’
‘of corn’ is ins.
‘the same’ is del. here.
‘trade of’ was ins. here, then del.
‘rise’ replaces ‘rise or fall’.
The words in brackets are ins.
Malthus’s p. 188; above, p. 171.
[*]This inference has been made only in the case of wages not absorbing by their rise the whole additional quantity of produce obtained by the farmer.
Replaces ‘a wrong’.
‘I do more, I maintain they would positively fall’ is del. here.
‘would not rise’ replaces ‘must also fall’.
‘the power’ is del. here.
The remainder of this paragraph replaces: ‘. If the farmer can not command more goods with his additional quantity of corn, then goods have not fallen in value in consequence of the fall in the value of labour, and [‘one of the conditions of the proposition is gone,’ is del. here] the profits of the manufacturers of those goods will be higher than before—they will obtain as great a value for their goods in each others commodities [‘and in corn’ was ins., then del.] as they did previously to the importation of corn, while the value of the labour which they employ to obtain them will be less, and this it is which constitutes high profits. If Mr. Malthus says that corn will fall so much that the farmer will get no additional profits, then he must admit that his profits will not conform to the general rate of profits, because the fall of corn and labour, compared with commodities, is the same thing with him as a high value of commodities, and therefore he gives up his proposition of a fall in the value of commodities and he establishes the necessity of high profits on manufactured goods. “But the rate of returns (from agriculture) must obviously conform itself to the general rate of profits,” and therefore profits on agriculture will be also high.’
Replaces ‘from the discovery of some rich mine’.
Replaces ‘to my mind’.
‘the prices of’ is ins.
First written ‘a given quantity of capital and labour will procure a greater quantity of corn from abroad, when applied to manufactures’, then revised as above.
Cp. above, pp. 117–18.
Malthus’s p. 183; above, p. 166.
See e.g. Malthus’s p. 97; above, p. 68.
‘capital’ replaces ‘profits’.
Blank in MS. The reference is no doubt to Note (58).
‘—to a small’ is del. here.
In MS, ‘209’.
Last six words replace ‘which’.
‘than double also’ is ins.
The remainder of the Note replaces an earlier version which read: ‘Mr. Malthus has either not read what I have said with his usual attention or has not interpreted me with his usual candour [‘either’ is del., and the last nine words are replaced by ‘or he could not suppose that I was of opinion that the landlords rent increased in proportion to the gross produce’]. If with a certain capital 180 qts. of corn are raised and the landlord obtains 10 qts. for rent, I say if the quantity obtained with the same capital be increased to 360 qts. he will not have a rent of the same value unless he have 20 qts. or one eighteenth as before [‘because 20 qts. will be of no more value in exchange than 10 were before’ is ins. here]. If with a second capital only 340 qts. be raised, which is the reason of his obtaining 20 qts. as rent, I do not say he is to have an eighteenth part of the 340 qts. also, [‘and of all the produce which can be employed on the land with such a rate of return,’ is ins. here] and of the 320 which may be the produce’. The rest of this version is missing.
‘may have’ replaces ‘has’.
‘can’ is written above ‘may’, which however is not del.
Last five words are ins.
An unfinished paragraph is del. here: ‘It is according to the division of the produce of any given capital between the 3 classes that we are to judge of rent, profit, and wages. Suppose on a given farm with a given capital 100 qrs. of corn are raised and that the land-
and that next year, owing to new lands being taken into cultivation elsewhere, these 100 qrs. are differently divided and the landlords receive one third—33the farmer—
A paragraph is del. here: ‘Rent is not a proportion of the produce obtained—it is not governed like wages or profits by proportions—depending as it does on the difference between the quantity of produce obtained by two equal capitals. If therefore I have anywhere said that rent rises or falls in the proportion that the produce obtained is increased or diminished I have committed an error. I am not however conscious of having so done.’
Replaces ‘But value is regulated by the quantity last produced’.
Replaces ‘if I have said so’.
Replaces ‘substituting the word “portion”, instead of proportion’.
Cp. the alteration in ed. 3 of Ricardo’s Principles, above, I, 83,n. 1, and cp. 402–3.
‘admits’ is del. here.
An unfinished paragraph is del. here: ‘Mr. Malthus as I before observed does not appear to understand what I have said about proportions and it is important that I should not be misunder-stood on that subject. Suppose I employ 3 equal quantities of capital successively on the same land as the prices rise. I say when the second quantity is applied, the proportion [‘paid to the landlord’ is ins. here] of the quantity obtained by the first will be increased—he will have no portion whatever of the second. When the third quantity of capital is applied he will get a still larger proportion of the quantity obtained by the first capital, a small proportion of the quantity obtained by the second, and no portion of the third. Though the proportion of each quantity before obtained will be increased, the proportion of the whole quantity obtained allotted to the landlord will be diminished. Suppose the quantity obtained by the 1st capital were 1800 qrs. by the second 1780 and by the third1760. When the 2d capital was employed he would have 20 qrs. as rent or 1/90 of the quantity obtained by the first capital, but this would be only 1/179 of the whole. When the 3d capital was employed he would get 40 qrs. on No. 1 or one 1/9, and 20 qrs. of No. 2 or 1/17.’The incorrectness of these calculations is partly due to an alteration of the figures which was not completely carried through.
‘manifest and’ is ins.
‘great’ is del. here.
‘capital and a’ is ins.
The remainder of the Note is ins.
‘he is only permanently’ is del. here.
In MS, ‘221’.
‘with the same capital’ is ins.
Should probably be ‘which this additional quantity of labour employed could produce.’
‘permanent’ is ins.
‘whether they do not’ is ins.
‘and commodities’ is ins.
‘could’ is ins.
‘Mr. Malthus thinks this would not be the case’ is del. here.
Replaces ‘I confess those grounds have’.
Replaces ‘real exchangeable value’.
‘of value’ is ins.
The MS has here a cross, perhaps a reference to a footnote on a lost slip.
Last twelve words are ins.
‘natural prod...’ is del. here.
‘surplus’ is del. here.
‘from which we derive’ replaces ‘of’.
Last seven words replace ‘and all that’.
‘the real’ replaces ‘that’.
‘sometimes’ was ins. here, and then del.
Replaces ‘The surplus produce shews itself in profits and wages,’.
Malthus’s p. 229; above, p. 210.
‘very’ is ins.
The last two sentences, beginning ‘If the taxes’, are ins.
Last seven words replace ‘it’.
‘consequent’ is ins.
‘to any one else’ is del. here, and ‘any one else’ is ins. seven words below.
The whole Note is del.
Last six words are ins.
‘The rate of profits in’ replaces ‘The profits of’, here and six words below.
‘proportional’ was ins. here, and then del.
‘relative’ is del. here.
‘the prices of’ is ins.
An unfinished paragraph is del. here: ‘The relative cheapness of corn to manufactures [‘particularly’ ins., then del.] if the goods are made in the country, and are made with the usual and ordinary quantity of labour,’.
‘in return’ is ins.
‘the price of their goods’ replaces ‘prices’.
Replaces: ‘The present rents once constituted profits.’
‘or growing’ is del. here.
Above, I, 126.
Replaces ‘the demand regulates the supply’.
Last six words are ins.
‘constantly’ is ins.
Replaces: ‘With every demand for an increased quantity it will rise above this price therefore if capital and population regularly increase the market price may for years exceed its natural price. I am however very little solicitous to retain my definition of the natural price of labour—Mr. Malthus’s will do [‘nearly’ is ins. here] as well for my purpose.’
Replaces ‘increased supply and diminished demand?’
‘capitals’ replaces ‘profits’.
‘in the country’ is ins.
A footnote written on a loose slip is printed here in the Johns Hopkins ed., but it properly belongs to Note (208), p. 320 below.
Replaces ‘the money price of wages’.
‘temporary, and’ is ins.
Replaces ‘or it must be permanent’.
‘capitalist’ is del. here.
‘paying’ is ins.
‘former’ is ins.
‘and wages do not fall’ is ins.
Above , I, 95.
‘effective’ is ins.
A sentence is del. here: ‘Fixed capital cannot be increased, but through the means of labour— and therefore there must previously be an increase of circulating capital, or which is the same thing, a diminution of unproductive, and an increase of productive consumption.’
‘an additional quantity of labour’ replaces ‘this additional capital in the support of labour’.
‘they’ was ins. here, and then del.
In MS, ‘262’.
The whole Note is del. The above is only a fragment: the original Note must have covered over six pages of the MS, as it appears from the gap in the pencil numeration of the sheets.
Should be 950, as below.
‘950’ and ‘150’ replace respectively ‘900’ and ‘100’.
‘it is quite possible that’ is del. here.
A sentence is del. here: ‘This is perhaps the only case in which the substitution of labour for fixed capital, if horses can be so called, is not attended with advantage to the capitalist yet is nevertheless beneficial to the working classes.’
‘a money’ was ins. here, then del.
Replaces ‘for value depends upon quantity.’
‘less’ is del. here.
‘capital’ replaces ‘profits’.
There are three versions of this Note, of which the final one is printed above. The earliest attempt began as follows: ‘By price Mr. Malthus means money price and of course at a time when money is not varying in value. This it must be remembered is my measure of value which Mr. Malthus so loudly condemns. In this passage he proposes a compromise with me, he will admit one half of my measure of value if I will admit one half of his. I cannot consent’—here Ricardo broke off and started again:‘Mr. Malthus must mean price in a money stationary, or varying in value. If the former, I say that the whole value depends upon price [replaced by ‘upon price and not upon quantity’; which in its turn is replaced by ‘upon the price of the whole quantity’]; and that it will be durable; and with little or no increase of quantity, there will be no increase of wages because the demand for labour depends on quantity. Though the whole produce may be at a greater price taken collectively every thing may be at its former price. The price of 150 qrs. of wheat may be greater than the price of 100 qrs. and yet each individual quarter may be at the same price. If Mr. Malthus means that the value of the whole produce depends in any degree upon price in a varying medium, I do not know how to argue with him, for then our notions of value are so different that we clearly do not understand the terms used by each other. In such a medium an increase of price may take place without any increase of quantity, [‘and even with a diminished quantity’ is ins. here] or the contrary may be the fact, the quantity and price may both rise, or both fall.’ This again was superseded, but two concluding sentences, which followed here, are preserved at the end of the final version of the Note.
‘then’ is del. here.
‘quantity of produce’ is del. here.
Here ends the re-written section; cp. above p. 242, n. 1.
‘real’ is del. here.
‘This is only saying’ is del. here.
The remainder of the sentence replaces ‘that tho’ the labourers portion of these 100 quarters before produced was 70 quarters and is now reduced to 65 quarters yet the latter quantity may be a larger proportion of the whole value. Corn may have risen in value in any measure Mr. Malthus will name, and therefore if 65 qrs. be a greater proporti...’
‘with the same quantity of labour’ and ‘then’ are ins.
Last six words are ins.
The whole Note replaces: ‘I do not understand what the author means by these words.’
‘to the limit of’ replaces ‘in proportion as’.
‘in those two causes’ is del. here.
‘however’ replaces ‘then’.
‘quantity’ is del. here.
‘which may be’ is ins.
Malthus’s p. 310; below, p. 269.
Malthus’s p. 310.
‘whole’ is del. here.
[*]Note. Looking to my Chap. on Wages I seepage . The market price of labour is the price which is really paid for it, from the natural operation of the proportion of the supply to the demand; labour is dear when it is scarce, and cheap when it is plentiful.page [94–95]. “Notwithstanding the tendency of wages to conform to their natural rate, their market rate may, in an improving society, for an indefinite period, be constantly above it.”page . [“]Independently of the variations in the value of money, which necessarily affect wages, but which we have here supposed to have no operation, as we have considered money to be uniformly of the same value, it appears then that wages are subject to a rise or fall from two causes:The supply and demand of labourers.The price of the commodities on which the wages of labour are expended.”Now be it observed that these two causes are the very same as those mentioned by Mr. Malthus as operating on profits in Page 294 of his work.See also pages  and  Chap. 16.
Replaces: ‘All these circumstances come under the general one of “what proportion of the produce shall be given to the labourer”. Profits depend on wages’.
‘real’ is ins.
Blank in MS. See Malthus’s p. 91 ff; above, p. 60 ff.
‘from rising much’ replaces ‘down’.
Last six words are ins.
‘Under the circumstances mentioned’ is del. here.
‘always’ is ins.
‘high money prices’ replaces ‘they’.
‘or at least they would only do in proportion’ is del. here.
‘uniformly’ was ins. here, and then del.
‘not changed from his own to mine and from mine to his own on various occasions’ is del. here.
‘real’ is ins.
‘On the land last cultivated the farmer will get a less portion of corn and the labourer will’ is del. here.
‘and will’ is ins.
‘equal’ is ins.
‘value’ replaces ‘proportion’.
Replaces ‘to stimulate to’.
Last eight words replace ‘have a less’.
‘freely and’ is del. here.
Blank in MS. See Note (171), above, p. 264.
First written ‘that land which regulates profits. I have said so on Page 66’ [of ed. 2; above, I, 79–80]; then replaced by ‘that land which regulates both wages and profits’; finally altered as above.
‘even’ is ins.
Above, I, 17, n. 3.
Replaces ‘in all measures’.
‘of importation’ is ins.
‘on that land’ is ins.
‘value’ replaces ‘price’.
‘fall’ replaces ‘rise’.
‘lower both’ replaces ‘raise’.
‘exchanged for corn’ is del. here.
‘the labourer be’ is ins.
‘real’ is ins.
Blank in MS. See Note (162), above, p. 254.
Replaces ‘if it could happen’.
A blank space was left for the comment in the MS, but it was not filled.
The whole Note is ins.
‘commodities’ is del. here.
‘last cultivated’ is ins.
‘and’ is del. here.
‘or indeed the whole’ is del. here.
‘individuals’ replaces ‘they’.
‘and what I think erroneous opinions are advanced with much perseverance in every part of his’ is del. here.
Replaces ‘will not consume, nor cause to be consumed by others, with a view to reproduction, the things which they have power to command’.
‘purchase’ replaces ‘consume’.
‘parliament to’ is del. here.
Replaces ‘so fall, in labour,’.
Replaces ‘there may be a glut of commodities estimated in labour’.
The remainder is ins.
‘generally’ is ins.
‘to consume’ is ins.
The last two lines, beginning ‘they will not’, replace ‘will they exchange freely for each other in the market?’
‘only’ is ins.
‘it’ replaces ‘they’.
‘society’ replaces ‘man’; and below ‘their’ replaces ‘his’.
‘foreign to’ replaces ‘beside’.
[*]Note. When I had the 1000 quarters the whole was consumed within the year, and so at every subsequent period â€”it is always consumed and reproduced. The word accumulation misleads many persons and sometimes I think it misleads Mr. Malthus. It is by many supposed that the corn is accumulated, whereas to make such a capital productive and to increase wealth it must be constantly consumed and reproduced.1
This footnote is written on a loose slip of paper. Cp. above, p. 231,n. 5.
‘the price of’ is ins.
Last four words are ins.
Replaces ‘will it be divided.’
‘in’ replaces ‘of’.
‘his’ replaces ‘the’.
The remainder of the sentence is ins.
Last three sentences, beginning ‘Mr. Malthus clogs’, are ins.
‘only’ is ins.
Replaces ‘and yet that capital will not afford’.
‘in many cases’ in ins.
This sentence, beginning ‘It is not’, is ins.
‘by saving’ is ins.
‘We all agree’ is del. at the opening of the Note.
‘in this instance’ is ins.
Cp. Malthus’s p. 214–15, note; above, p. 194.
The remainder of the Note replaces: ‘he must produce conveniences and luxuries for his master; if he can with great facility, and in a little time, produce the necessaries which he may require.’
probably’ is del. here.
‘the superior’ is ins.
Replaces ‘the state of the soil’.
‘to wages’ ins. here, then del.
‘always’ is ins.
Replaces ‘I am’.
‘make them’ here, and ‘induce them to’ in the following line, are ins. 382
‘He´, monsieur, une bonne économie politique, je le répète, conseille peu’; Lettres à M. Mal-thus, 1820, p. 85 and cp. p. 72.
Malthus’s p. 377; above, p. 332.
Last four words are ins.
Note (227) above.
‘high’ is ins.
‘great’ is ins.
‘not’ is ins.
‘motive’ is del. here.
Replaces ‘there would be a corresponding desire to’.
‘much of the’ is ins.
‘place it’ is ins.; ‘in’ is omitted by an oversight.
An unfinished passage is del. here: ‘Suppose that I employed a hundred horses with 10 heavy waggons to convey goods from London to Birmingham, and that each waggon was worth £100, and the 10 £1000. Suppose now that an improvement’.
‘can command less labour, or rather’ is del. here.
Corrected in pencil, by another (apparently McCulloch’s) hand, to read: ‘and there is no reason why any less should’.
Replaces ‘Unless a capital’.
This quotation and the others that follow in this Note are from Malthus’s pp. 404–6.
The last eleven words, beginning ‘under any’, were originally placed at the end of the sentence, after ‘themselves’.
‘the unlimited use of’ is ins.
Replaces ‘whether he shall prefer tea, tobacco, or’.
Cp. the sub-title of Mill’s Commerce Defended (1808) ‘An Answer to the Arguments by which Mr. Spence, Mr. Cobbett, and Others, have attempted to prove that Commerce is not a Source of National Wealth.’
‘more’ was ins. here, and then del.
The first part of the sentence replaces ‘Can improvements’.
‘seeming’ is ins.
‘it is true’ is del. here.
See Malthus’s p. 413.
Last eleven words, beginning ‘the means’, replace ‘they can never’.
Written above ‘each’, which however is not del.
‘that labour has fallen in value’ replaces ‘either that commodities have risen in value without a corresponding rise of labour, or that labour has positively fallen’.
Last nine words replace ‘by commodities and not by their value’.
Last four words replace ‘not rise’.
[*]In cost of production I always include profits at their current rate.
‘of labour’ is ins.
Last nine words replace ‘therefore 12000 would’.
‘had and all they’ is ins.
In MS this sentence is written on a slip stuck with wafers upon the sheet. It covers a continuation of the preceding sentence, which read: ‘follows, no more than ten thousand may be in constant employment and in full work one sixth of the ...’; this was altered to ‘follows, any more than that those who now can earn ten thousand days work are in constant employment and in full work.’; this was replaced as above.
Last six words are ins.
Last four words are ins.
Replaces ‘Can Mr. Malthus be right when he says’.
‘the same quantity of necessaries’ is del. here.
Replaces ‘its profits would be no higher’.
This paragraph is ins.
‘in quantity’ is ins.
‘absolute’ is ins.
Above, I, 348.
Last four words replace ‘argument.’
In a note to the French translation of Ricardo’s Principles, 1819, vol. 2, pp. 222–4; cp. above, I, 349,n. 3.
Last four words are ins.
‘M. Say’ is del. here.
‘All improvements in machinery have the same effect.’ is del. here. 427
The whole Note is del.
‘inclined and probably’ is ins.
‘farmers, shopkeepers, &c. &c.’ is ins.
‘his original share of’ is ins.
‘contiguous’ is ins.
‘greater profits’ replaces ‘savings’.
‘not’ is ins.
‘merchant’ is del. here.
‘are’ replaces ‘have only been as’.
‘relative’ is del. here. 5 Replaces ‘if’.
Last eight words replace ‘the particular profits of a trade’.
Replaces ‘When a merchant sells’.
Replaces ‘a given’.
See Malthus’s p. 443; above,p. 394.
‘relative’ is del. here.
Replaces ‘he thinks too’.
Replaces ‘Have they not’.
Last six words are ins.
Note (263) above.
Replaces ‘as Mr. Malthus supposes’.
Malthus’s p. 450; below, p. 403.
Last five words are ins.
‘as before’ is del. here.
Last six words are ins.
‘diminished expenditure’ is del. here.
Replaces ‘I could command’.
‘but either by determining whether’ is del. here.
‘or desirable’ is ins.
Replaces ‘The more foreign commodities they buy, the [‘less’ was omitted here by a mistake] quantity [replaced by ‘value’] of home commodities they can purchase.’—‘Observe I say “value they expend” not quantity bought’ is del. here.
Replaces an unfinished version: ‘Increased! in what? in the quantity of consumable commodities; in this we agree, the question is whether’.
Replaces ‘a useful’.
The two paragraphs that follow were ins. later in the MS; a fresh sheet being used, they were attached by mistake at the end of Note (275) below, where they are obviously out of place.
‘in amount to the profit’ replaces ‘to that’.
‘and is now relinquished’ is ins.
Last eight words replace ‘a value precisely equal’.
‘In what medium?’ is del. here.
Last sentence is ins.
‘value’ is del. here.
The remainder of the sentence replaces: ‘and, if the amount of commodities be not increased, they must have fallen in real value, if labour be the measure of value; because the same quantity of commodities cannot command the same quantity of value.’
In the MS two further paragraphs were attached at the end of this Note by mistake: they are now printed as part of Note(273), to which they properly belong (see above, p. 408, footnote 2). The interposition of this extraneous matter explains the anomaly of two Notes, (275) and(276), under the same heading.
‘without a fall [replacing ‘an increase’] in money wages’ is ins.
Replaces ‘It is compatible, but not essential to it, and in general does not accompany it.’
[*]Insert this. And why not? because the demand for labour would be greatly increased without a corresponding supply—wages would be high and the condition of the labourer most happy.
Replaces ‘Certainly, if it could be proved,’.
‘Suppose with’ is del. here.
Last two lines, beginning ‘might they’, replace ‘might not further savings be made?’
A paragraph is del. at the beginning of the Note: ‘No one can doubt the importance of the commodities produced being well adapted to the general wants as a cause of briskness of trade and the increase of wealth.’
‘quantity and’ is ins.
‘and amount’ is ins.
Malthus’s p. 165; above, p. 142.
‘to the national wealth’ is ins.
‘a barrel of’ is del. here.
‘at home’ is ins.
‘his’ is del. here.
‘such’ is ins.
‘labourers’ replaces ‘necessaries’.
Last six words are ins.
‘otherwise’ is ins. 463
‘increase your supply of’ replaces ‘maintain more’.
‘its owner’ replaces ‘it’.
‘would be true if the’ is del. here.
‘if possible’ is ins.
‘the Chancellor of the Exchequer’ replaces ‘Mr. Vansittart’.
In MS, ‘exchanges’.
Last sentence is ins.
Replaces ‘it is’.
Last sentence is ins.
Blank in MS. Probably Malthus’s p. 326; above, p. 285.
Corrected in pencil, by another (perhaps McCulloch’s) hand, to read ‘which we shall not here stop to enumerate.’