184.: ricardo to malthus1[Reply to 183] - David Ricardo, The Works and Correspondence of David Ricardo, Vol. 7 Letters 1816-1818 [1816]
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The Works and Correspondence of David Ricardo, ed. Piero Sraffa with the Collaboration of M.H. Dobb (Indianapolis: Liberty Fund, 2005). Vol. 7 Letters 1816-1818.
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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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184.
ricardo to malthus
[Reply to 183]
London 14th. Octr. 1816
My dear Sir
My stay in London will not be prolonged beyond friday next.—I hope it will be convenient to you to come up before. On thursday I shall be disengaged and will meet you at any place in London that may best suit you, unless you will dine with me at my brothers at Bow. His house is small, and I fear he has not, now we are with him, a spare bed to offer, and you may not like to travel so far at night. If so let us meet in the city, and get our dinner there.
The money wages of labour are I apprehend generally regulated by facility of production. With an abundant production too I think that a less proportion of the whole will be given to the landlords, and more will remain for the other two classes of capitalists and labourers,—but of this increased quantity a greater proportion will be given to Capitalists, and a less proportion to labourers. Now though what you call the real wages of labour, (but which I think a wrong term,) will increase the money wages will fall. But this will not be the case with profits, what you would call real profits would increase but so would also money profits. Under the circumstances then that I have supposed the rate of profits would rise though money wages would fall. The difference between us is this. I say, that with every facility or difficulty of production, of the quantity of necessaries, that is to be divided between profits and wages, different proportions will be given to each, and that money will accurately shew those proportions. You appear to me to think that profits do not depend on the division of the produce, and that money wages may as often rise with facility of production as fall.
You state the real question fairly it is “what is the main cause which determines the rate of profits under all the varying degrees of productiveness?[”] You do not appear to me [to] solve the question when you answer “that it is the proportion which capital bears to labour.[”]
In a rich country where profits are low and where a great portion of produce is paid to the landlords for rent the proportion of labour to capital will be the greatest, and yet according to your theory it should be the least.
You will not I think deny that in a country where labour is high a manufacturer would employ more capital to produce the same commodities than what he would do in a country where wages were low, and there also would profits be low, —that is to say profits are high where capital bears a large proportion to labour and low where labour bears a large proportion to capital.
I am writing amidst the noise of the Stock Exchange and very much fear that I shall be more than usually incomprehensible
Ever Yours
David Ricardo
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