malthus to ricardo
[Reply to 64.—Answered by 70]
E I Coll. Nov 23. 1814
My dear Sir,
I hope we shall be able some summer to pay you a visit at Gatcomb, but I am a little afraid that our vacation will be earlier in general than the commencement of your residence in the country, and that our chief intercourse must be while you are in Town.
You need not be afraid of my being tired of reading your letters, though I may have some apprehensions about the time required to answer them. In fact these subjects lead to so many interesting points of discussion that it is difficult to comprize what one wishes to say even in a long letter. I had rather have you here to criticize what I could better develop at greater length.
I have never that I recollect doubted or denied the general tendency of the accumulation of capital upon the land to diminish profits. But the acknowledgment of this obvious truth appears to me to be very different from the general position that the state of the land regulates profits.
Nothing can be more certain, for instance, than that the state of the land is the main cause of high wages, or the most scanty wages, according as it is fertile and abundant, or comparatively poor and scarce. But still it would be most incorrect to say that the state of the land regulates wages; because there are numerous instances where land is fertile and abundant, and yet wages are very low and the population stationary or retrograde. The reason of this is, that tho’ fertile land and a great plenty of it are the main cause of high wages of labour, yet they are not the sole or regulating cause, and without the accumulation of capital, which may be prevented by extravagant habits or a bad government[,] are inefficient to produce such high wages. In the same manner though the state of the land,—whether it is fresh and fertile, or comparatively at its utmost stretch of exertion, be the main cause of high profits, and of the final fall and almost ultimate extinction of profits, yet as the state of the land is by no means the sole cause which determines profits, but as they are powerfully influenced by the varying demands for produce occasioned by the prosperous or adverse state of commerce and manufactures, and the constant tendency to a fall in the wages of labour, it neither accords with theory or experience to call the state of the land the regulator of general profits. It is of course by no means enough to say that from the state of production from the land, compared with the means necessary to make it produce, you can infer with certainty the state of general profits; as this is merely saying what every body knows, that all profits must caeteris paribus be on a level. But the question is whether agriculture always takes the lead in the determination? and I should certainly say that it did not. When a new foreign commerce is opened, and new objects greatly in demand are brought into the market, the profits of such commerce must be higher than usual; and you allow that in this case capital may be taken from the land. But to allow this is at once to allow that the profits of foreign commerce determine in this case the profits on the land and that whichever is the highest will take the lead of the other.
Without however supposing capital to be taken from the land, the throwing of new objects of desire into the market will increase the value of the whole mass of commodities in the country, estimated either in money, or in corn and labour, and there will in consequence be a greater value of commodities to be exchanged for the raw produce. This increase in the value of raw produce must raise the profits of farming for a period of some duration; and it is in fact during these periods (with the exception of the first start as in America) that capital is most rapidly accumulated upon the land and the greatest improvements are made. With regard to the actual duration of such a period, it must of course depend upon various circumstances, particularly upon the extent and duration of the commerce, and the continued improvements made in manufacturing machinery. And without meaning to deny that a foreign commerce however prosperous is more easily saturated with capital than a large extent of fresh land. Yet both theory and experience shew that a period of comparatively high profits, (for 20 years perhaps), may take place contemporaneously in agriculture manufactures and foreign commerce, after a period of comparatively low profits. These periods I consider are of great importance to nations, and not to be undervalued, because as the progress of population and capital cannot be absolutely unlimited, the further you proceed the nearer you must approach to the limit. Permanent high profits cannot take place but under the greatest national misfortunes—a premature but permanent and effective check to accumulation or a great and irrecoverable loss of capital, and I entirely agree with you that they would be accompanied with low instead of high prices, at least with regard to agricultural products.
It is of great importance as you justly observe to ascertain the causes which may occasion a rise in the price of raw produce, and in enumerating them I cannot help thinking that you have too much overlooked those natural and necessary,—not accidental causes, which in every rich and populous country make a bushel of corn command a much greater quantity of manufactured and foreign produce, and generally of labour, than in a poor, country; and which owing to circumstances which counterbalance the principle you lay down, diminish rather than increase in rich and highly cultivated countries, the proportion of the whole population employed upon the land. My conclusion therefore on the whole is this, that tho I should allow without the least hesitation and quite as a matter of course, the tendency of an accumulation of capital on the land as well as in every other employment, to lower profits, yet I should say that this tendency was at times so counterbalanced by other causes naturally accompanying the progress of improvement, that a period when the profits on land were 8 per cent, might often be followed by a period of 20 years perhaps, when they were 10 or 12 per cent, and this, without the removal of capital from the land but while the progress of cultivation was going on and during these periods the state of manufactures and commerce would regulate the profits on land. The diminution of wages is a more directly necessary consequence of a difficulty in obtaining food, than the diminution of profits, as wages are the great regulator of the progress of population.
I cannot agree with you in thinking that the wants and tastes of mankind do not essentially influence general profits and the growth of raw produce. Taking man, as he is, and not supposing him to accumulate without motive, I believe that these tastes and wants as contradistinguished from the desire of mere necessaries, are, in these climates, and in the state of property derived from the feudal system, the cause of perhaps one third more raw produce, and 2 thirds more manufactured and foreign produce than we should have had without such tastes and wants.
Accumulation of produce is not accumulation of capital, unless what is accumulated is worth more than it cost, and if you were at once to employ all our soldiers sailors and menial servants in productive labour, the price of produce would fall more than ten per cent, and the encouragement to employ the same quantity of capital would cease.
I think I am right in what I said about the same incomes. In fact unless the commodities produced are new and more desirable, or cheaper, the producers will certainly be left to consume what they have produced them selves. Others will neither have the power nor the will to consume more. When I say I know no other cause &c: I mean to include of course a rise of produce accompanied by a still greater rise in the price of production; but I am of opinion that a positive fall of price is a very common effect of the employment of more capital, and will always take place when produce is increased by the employment of an unusual quantity of capital, before the wants and tastes of mankind and their power of purchasing have been increased in proportion. No more room
Ever truly Yrs
T R Malthus