ricardo to mcculloch
[Answered by 366]
London 2 May 1820
My dear Sir
In the Scotsman of Saturday last, which has just reached me, I perceive with much satisfaction that you have with your usual ability met Mr. Malthus, on what I consider his strongest ground. I assure you that I am highly gratified in having succeeded so well in my imperfect statements, as to engage you in their defence, for I should have no chance of procuring their admission into other people’s mind, without your powerful assistance. From the very complicated nature of the subject of value, Mr. Malthus has, I think, more chance of discovering some flaw in my argument in the chapter which treats of it, than in any other part of the book, and this chance is increased by my supposition of a medium which shall itself be invariable. This medium may be supposed to be produced under a variety of circumstances. It may either be the result of the employment of labour only, as supposed by Mr. Malthus, when he supposes it to be picked up on the sea shore, in which the advance of only one days sustenance is required; or it may be produced under all the variety of different portions of fixed capital, and employed for different portions of time. If produced by labour only—if half an ounce of silver could be picked up on the sea shore by a day’s labour, the natural price of labour would be always half an ounce of silver, it could neither rise nor fall. Corn might however be produced with more difficulty, and by the rise of its price, the wages of the labourer would be less adequate to procure him comforts and conveniences. In this case I should say wages would rise, because I always measure the rise of every thing by the quantity of labour necessary to produce it, and the wages though less in quantity would require more labour to produce them.—But if much fixed capital was employed in the mines, or if a considerable time must elapse before the circulating capital is returned by the sale of the silver, labour might be exceedingly variable in such a medium. Every commodity measured in such a medium would rise when labour rose, if it were the produce of labour only, or of a less portion of fixed capital than was employed in the production of money, and on the contrary from the same cause those commodities which were produced by larger proportions of fixed capital, or required more time to finish, would fall in price. This is all implied in my book, but I have not been sufficiently explicit, for I ought to have said that if the medium is produced under certain circumstances, there are many commodities which may rise in consequence of a rise in labour, altho’ there are many others which would fall, while a numerous portion would vary very little.
You, I know, understand me, but I fear that I have not been particular enough in shewing the various bearings of this question. After the best consideration that I can give to the subject, I think that there are two causes which occasion variations in the relative value of commodities—1 the relative quantity of labour required to produce them 2dly. the relative times that must elapse before the result of such labour can be brought to market. All the questions of fixed capital come under the second rule, which I will endeavor to explain if you should wish it.—
I thought of noticing the particular points on which Mr. M and I differ, and to have offered some defence for my opinions, but I should have little else to do but to restate the arguments in my book, for I do not think he has touched them. Mr. M adopts a measure of value very different from mine, but he no where adheres to it. Sometimes when he speaks of the rise of commodities he means their rise in money, at other times their rise in labour. His very standard is spoken of as rising and falling. In what medium does it rise and fall? in commodities whose value is estimated by the quantity of the very standard which he is thus measuring. Cloth has risen, he would say, because 100 yards of it will command more labour. Well then the variation is in the cloth, and labour is the standard by which it is measured; but labour is abundant, the population is excessive, wages are low, and the proof is that more labour is given than before for 100 yards of cloth, and for many other commodities.—
The most objectionable chapter in Mr. Malthus’ book is that perhaps on the bad effects from too great accumulation of capital, and the consequent want of demand for the goods produced. This doctrine naturally leads to the conclusion which Mr. Malthus draws from it. I could not have believed it possible, if I had not read it, that so enlightened a man as Mr. Malthus should recommend taxation as a remedy to our present distresses. He is not aware that the produce of a country is always consumed, and that saving means only that a larger portion shall be consumed by those who reproduce a value superior to their consumption. From the insufficient numbers of labourers, they may be enabled to command such a quantity of the produce as to leave little for profits, and thereby to deter capitalists from employing any additional capital in reproduction; but these low profits, if society be not at the end of its resources, arise only from the insufficient number of labourers to do the work required. It can never happen that capital and labour can be at the same time redundant, except as I said before you have arrived at the end of your resources, but Mr. Malthus talks of low profits from a want of demand, and thinks it quite possible that you may have more capital than you can employ, with a redundancy of people.
According to him you produce too much and consume too little, and as you are so obstinate that you will not consume yourself he recommends that taxes should be imposed, and that government should expend for you.
Mr. Malthus does not appear to have understood me respecting improvements on the land. I have not denied that eventually they will be very beneficial to landlords, but their immediate effect is to lower rent. When the same land is again cultivated in consequence of increased population the landlords corn rent will be higher, but his money rent will be the same as before , for the price of corn will be lower. As however inferior lands can be cultivated with a lower price of corn, the improvement cannot fail to become, at no distant period, very beneficial to the landlord. All this I think I have allowed—if I have not, I ought to have allowed it. He has not acted quite fairly by me in his remarks on that passage in my book which says that the interest of the landlord is opposed to that of the rest of the community. I meant no invidious reflection on landlords—their rent is the effect of circumstances over which they have no control, excepting indeed as they are the lawmakers, and lay restrictions on the importation of corn. —
I am surprised that rent should be still spoken of as a surplus produce, differing in that respect from the produce of manufactures. Is it any thing but a value transferred? Could it exist in the same degree as it does if the lands were all more fertile or varied less in relative fertility? Might we not have more produce with less rent?
These are all the observations which I intend making on Mr. Malthus’ work. If you should write any remarks upon it I should very much like to see them, and should without scruple say to you whatever might occur to me on perusing them. At present I feel a real difficulty, for I confess I do not very clearly perceive what Mr. Malthus system is. He and I differ in our opinions on the benefits resulting from foreign trade, but what his opinion is I do not well know. I have read his book rather in haste, and after different intervals of time, so that I have not strictly done it justice—I mean to go over it carefully again.
I am expecting the Merchants petition to be presented in a few days. I am glad to see that the doctrines of the advantages to be expected from a free trade are daily gaining converts. I am sure that the public are much indebted to you for enlightening them on that important subject.—
I remain with great esteem Very faithfully Yrs.