392.: ricardo to malthus1[Reply to 388.—Answered by 395] - David Ricardo, The Works and Correspondence of David Ricardo, Vol. 8 Letters 1819-June 1821 
The Works and Correspondence of David Ricardo, ed. Piero Sraffa with the Collaboration of M.H. Dobb (Indianapolis: Liberty Fund, 2005). Vol. 8 Letters 1819-1821.
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ricardo to malthus
[Reply to 388.—Answered by 395]
Gatcomb Park  Octr. 1820
My Dear Malthus
The Queen’s defence appears to be going on well—a few more such evidence as Sir Wm. Gell and I think the Lords cannot pass the bill: in that case I shall not be called to town, and if you are in this part of the world at Christmas perhaps we shall see you at Gatcomb.
Warburton is staying at Easton Grey, and has paid us a visit of two or three days with the Smiths—he was very agreeable. He does not speak quite positively, but I think he is one of my disciples, and agrees with me on some of those points which you most strongly dispute.
I quite agree with you in thinking that M Say’s letters to you are not very well done. He does not even defend his own doctrine with peculiar ability, and on some other of the intricate questions, on which he touches, he appears to me to be very unsatisfactory. He certainly has not a correct notion of what is meant by value, when he contends that a commodity is valuable in proportion to its utility. This would be true if buyers only regulated the value of commodities; then indeed we might expect that all men would be willing to give a price for things in proportion to the estimation in which they held them, but the fact appears to me to be that the buyers have the least in the world to do in regulating price—it is all done by the competition of the sellers, and however the buyers might be really willing to give more for iron, than for gold, they could not, because the supply would be regulated by the cost of production, and therefore gold would inevitably be in the proportion which it now is to iron, altho’ it probably is by all mankind considered as the less useful metal.
I think more may be said in defence of his doctrine of services—they are I think the regulators of value, and if he would give up rent, he and I should not differ very materially on that subject. In what he says of services he is quite inconsistent with his other doctrine about utility. He appears to me to talk very ignorantly of the taxation of England. In the note, Page 101, he concedes too much. The difficulty of finding employment for Capital in the countries you mention proceeds from the prejudices and obstinacy with which men persevere in their old employments,—they expect daily a change for the better, and therefore continue to produce commodities for which there is no adequate demand. With abundance of capital and a low price of labour there cannot fail to be some employments which would yield good profits, and if a superior genius had the arrangement of the capital of the country under his controul, he might, in a very little time, make trade as active as ever. Men err in their productions, there is no deficiency of demand. If I wanted cloth, and you cotton goods, it would be great folly in us both with a view to an exchange between us, for one of us to produce velvets and the other wine,—we are guilty of some such folly now, and I can scarcely account for the length of time that this delusion continues. After all, the mischief may not be so great as it appears. You have fairly represented the point at issue between us—I cannot conceive it possible, without the grossest miscalculation, that there should be a redundancy of capital, and of labour, at the same time.
When I say mine is the true faith I mean to express only my strong conviction that I am right, I hope you do not attach any thing like arrogance to the expression. I am in the habit of asserting my opinion strongly to you, and I am sure you would not wish me to do otherwise. I am satisfied that you should do the same by yours, and I dare say you will agree with me that you are not more inclined to yield to mere authority without being convinced than I am. I affirm with you that “if the farmer has no adequate market for his produce, he will soon cease to distribute more necessaries to his labourers” with a view to the production of more necessaries, but will he therefore leave that part of his capital inactive, will not he, or somebody else, employ it in producing something which will meet an adequate market. You speak of the relative utility of our two definitions of value. I confess that your definition does not convey to my mind any thing approximating to the idea I have ever formed of value. To say that real value as applied to wages implies the quantity of necessaries given to the labourer, at the same time that you agree that these necessaries are as variable as any thing else, appears to me a contradiction. Political Economy you think is an enquiry into the nature and causes of wealth—I think it should rather be called an enquiry into the laws which determine the division of the produce of industry amongst the classes who concur in its formation. No law can be laid down respecting quantity, but a tolerably correct one can be laid down respecting proportions. Every day I am more satisfied that the former enquiry is vain and delusive, and the latter only the true objects of the science. You say that my proposition “that with few exceptions the quantity of labour employed on commodities determines the rate at which they will exchange for each other, is not well founded” I acknowledge that it is not rigidly true, but I say that it is the nearest approximation to truth, as a rule for measuring relative value, of any I have ever heard. You say demand and supply regulates value—this, I think, is saying nothing, and for the reasons I have given in the beginning of this letter—it is supply which regulates value—and supply is itself controlled by comparative cost of production. Cost of production, in money, means the value of labour, as well as profits. Now if my commodity be of equal value with yours its cost of production must be the same. But cost of production is with some deviations in proportion to labour employed. My commodity and your commodity are both worth £1000—they will therefore probably have the same quantity of labour realized in each. But the doctrine is less liable to objections when employed not to measure the whole absolute value of the commodities compared, but the variations which from time to time take place in relative value. To what causes,—I mean permanent causes, can these variations be attributed? to two, and to two only; one insignificant in its effects—a rise or fall of wages or what I think the same thing a fall or rise of profits—the other, of immense importance, the greater or less quantity of labour that may be required to produce the commodities. From the first cause no great effects can follow, because profits themselves constitute but a small portion of price, and no great addition, or deduction can be made on their account. To the other cause no very confined limit can be assigned, for the quantity of labour required to produce commodities may vary to double or treble.
The subject is difficult, and I am but a poor master of language, and therefore I shall fail to express what I mean. My first chapter will not be materially altered—in principle I think it will not be altered at all.
We are all well here and all unite in kind regards to Mrs. Malthus.
Ever truly Yours