trower to ricardo
[Reply to 380.—Answered by 387]
Unsted Wood—Sept. 20. 1820
My Dear Ricardo—
You will be surprised at my returning so early an answer to your last kind letter. The fact is, I am desirous of making some observations on a question to which I called your attention in my last letter. The point is important, and as I confess your reasoning has not satisfied my mind, I am anxious, if I am in error to request your assistance to set me right. But, I must, first of all, congratulate you upon your escape from the very alarming predicament, in which you, and your friends, appear to have been placed, in crossing the river you mention. It would not have been a very glorious termination to your career, to have been swamped! and you are one of the last men I should have suspected, on any occasion, of getting out of your depth!
You say “you do not think with me, that a demand for labor is the same thing as a supply of Necessaries.” And “that an additional quantity of necessaries will not occasion any greater demand for labor than if an additional quantity of iron was brought to market.”
The foundation of all Wealth is the power, which man possesses, by means of his labor, in conjunction with the powers of nature, to produce more of any commodity than is necessary for his own use—Hence arises the surplus produce of Commodities, which is the fund of profit, and revenue, and from which proceeds the growth of capital—
In a Country, in any degree advanced in civilization, its productive capital and labor will naturally divide themselves into two parts. that employed in land, and that in manufactures. These, for the purpose of my argument I shall class under the two general heads of Necessaries, and of Conveniences—By Necessaries meaning food and those other commodities, which, under any given state of society, constitute the support of the laborers, and lower classes of the people—And by Conveniences meaning all those commodities, of whatever description, which administer to our comfort and enjoyments; and which are consumed, in different degrees, by all classes above that of laborers. There will, then, be an annual surplus produce of Necessaries, and of Conveniences. And these will be exchanged for each other.
But, the surplus produce of Necessaries must, in the first instance have preceded the surplus produce of Conveniences; for, if there had not been any such surplus, Conveniences could not have been produced. The producers of Necessaries, creating more commodities than are requisite for their own support, employ that surplus in setting to work laborers (not required for the production of Necessaries) upon the production of Conveniences. And the producers of Conveniences also create more of their Commodities than they require for their own use. But, they cannot employ their surplus in the employment of laborers, because, it does not consist of articles required by the laborer. If their object is to encrease the amount of the Commodities they produce, they must exchange their Conveniences for Necessaries, or, if their object is to encrease their comfort they will exchange their Conveniences for other Conveniences.
You say, “no Commodity is raised without there is a demand for it.” It is perfectly true, that no Commodity will continue to be raised unless there is a demand for it. But, it is in the nature of all Commodities to create their own demand. The amount of the surplus produce of Necessaries limits the whole amount of labor, which can be employed upon the production of Conveniences. But, within that limit, these conveniences may be multiplied and varied, according to the taste and desire of the Consumers.
But, here there is an action and reaction; for, in proportion as conveniences are multiplied, the desire to possess them is encreased. This desire is felt, in common, by the producers of necessaries, they encrease their produce, in order to possess these Conveniences, and, by this encreased produce of Necessaries, enable the producers of Conveniences to employ more labor for their further production.
What is the surplus produce but an excess of the Commodity produced over the expence of producing it? When that excess consists of Necessaries, it may be disposed of, either in the employment of more labor in the production of the same Commodities; or in the employment of more labor in the production of Conveniences; or in the employment of more nonproductive labor. If productively employed, then, Nonproductive consumers may be converted into productive ones: But, in whatever way it is employed, it occasions an increased demand for some sort of labor. If that encreased demand is not met by an encreased supply, then, the whole of this surplus produce, which consists of Necessaries, is distributed among the existing laborers; and their condition is improved accordingly; and from this improvement it is, that the increase of population proceeds. It is true, that this increase does not necessarily take place, nor for some time, but, this surplus is the fund, and the only fund, which can occasion it.
Now, let us suppose this surplus to consist of an excess of Conveniences. How can it be disposed of? Not in the employment of labor, because it does not consist of Necessaries. It may be exchanged for Necessaries—and then, those Necessaries may be productively employed; or it may be exchanged for other Conveniences, but its power of employing labor must depend upon its power of first obtaining necessaries. How, then, can Necessaries and Iron have similar effects. There is a natural division, which takes place in the distribution of labor and capital, in every Country; and upon the actual division corresponding with this natural division, it appears to me, principally depends the prosperity of States—
Suppose, that natural division to require, that one fourth part of the population and a proportionate amount of capital, should be employed in producing Necessaries, for the whole population—Suppose another fourth, with its due proportion of Capital, to be employed in the production of Conveniences; and the other two fourths to be nonproductive consumers—If this were the natural state, any considerable deviation from it, must be attended with sensible inconvenience; and especially, if any material reduction should take place in the portion allotted to the production of Necessaries; either, by too large a proportion being engaged in producing conveniences; or, becoming non productive consumers. It is true, that no great deviation from this natural point could long continue; Capital and labor would again find their proper station; but, it is during these intervals that those inconveniences and sufferings take place, by which the prosperity of states is affected.—
You say you do not think with me “that a demand for labor is the same thing as a supply of Necessaries.”
You admit (561) “that the general progress of population is affected by the increase of Capital,” and you define Capital (93) [“]that part of the Wealth of a Country which is employed in production, and which consists of food, clothing &&.” It follows, therefore, that the general progress of population is affected by the increase of food and clothing. But, food and clothing are necessaries, therefore the growth of population is affected by the increase of necessaries. And, what is an increase of necessaries, but an additional supply of necessaries, by which the progress of population is affected? And how can the progress of population be affected by this additional supply, unless preceeded by it; and, if preceeded by it, then, “the abundance of necessaries raises up demanders.” You also admit (561) “that an increase of Capital occasions a demand for labor, and a rise of wages.” And, is not a demand for labor the same thing as a supply of necessaries? How could labor be demanded; if the demander had not a supply of necessaries, ready provided for the labor he demanded; or, what amounts to the same thing, did he not possess the means of providing those laborers with the supply of food and clothing they would require? No amount of capital could enable him to make that demand for labor, unless it consisted of that portion of the productive capital, which is composed of necessaries, or unless it had the power of commanding them. Here I will stop, for this is enough for one dose, and I am afraid you will think too much. And, indeed, in reading over my letter, I think I might have condenced the matter into smaller compass. But, I am anxious that you should understand my argument, and if I am wrong, that you should point out the source of the error for it is an important question.
Have you seen Mr. Say’s letter to Mr. Malthus in the New Monthly Magazine for Sep: —And what think you of it?
The argument he urges against Mr. Malthus is in some degree connected with the question I have been here considering. He contends there can be no excess of commodities, and that it is production, which opens the market to produce.
But, I confess, I think, this proposition must be limited, as I have endeavoured to limit it above, by the due distribution of the capital of the Country. For, to me it appears obvious that if too small a proportion of the capital of the Country should be employed in producing necessaries, owing either to the low profits on land, or the High profits on Manufactures, that such commodities might (during that state of things) continue in excess.
Mr. Say’s notion of immaterial services &. appears to me fanciful and useless, and his notion, that any man, who writes upon political Economy should banish from his thoughts the distinction between durable and perishable commodities, altogether erroneous—But, really I must have done, or you will not have patience to read my letter with that attention which I wish you to do.
I am happy to say, that my knee is a great deal better, but I move cautiously, and, as the pleasure of exercise is gone, at least for a time, I take only that quantity which I consider necessary to health.
I wish I could see my way through this horrible affair of the Queen. Serjeant Onslows proposition is Monstrous—You Gentlemen of the Commons are tyrants enough at present; and what you might become when possessed of the power of examining on Oath, I, for one, am not desirous of ascertaining! It would be sacrificing principle for the sake of present convenience; and would be the means of establishing a most dangerous precedent, pretences for acting upon which there would hereafter be no difficulty in finding.
Mrs. Trower begs to join with me in kind remembrances to Mrs. Ricardo, and believe me My Dear Ricardo
Yrs very sincerely