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• Abbreviations
• 437.: Ricardo to Trower1[reply to 435.—ANSWERED By 445]
• 438.: Mill to Ricardo1[answered By 441]
• 439.: Ricardo to Mcculloch1[answered By 474]
• 440.: Malthus to Ricardo1[answered By 442]
• 441.: Ricardo to Mill1[reply to 438.—ANSWERED By 448]
• 442.: Ricardo to Malthus1[reply to 440.—ANSWERED By 443]
• 443.: Malthus to Ricardo1[reply to 442.—ANSWERED By 444]
• 444.: Ricardo to Malthus1[reply to 443.—ANSWERED By 455]
• 445.: Trower to Ricardo1[reply to 437.—ANSWERED By 447]
• 446.: Say to Ricardo1[reply to 430.—ANSWERED By 488]
• 447.: Ricardo to Trower1[reply to 445.—ANSWERED By 456]
• 448.: Mill to Ricardo1[reply to 441.—ANSWERED By 449]
• 449.: Ricardo to Mill2[reply to 448.—ANSWERED By 450]
• 450.: Mill to Ricardo2[reply to 449.—ANSWERED By 453]
• 450a.: Place to Ricardo1[answered By 451]
• 451.: Ricardo to Place1[reply to 450a]
• 452.: Ricardo to Murray1
• 453.: Ricardo to Mill1[reply to 450]
• 454.: Ricardo to Malthus1[answered By 455]
• 455.: Malthus to Ricardo3[reply to 444 & 454.—ANSWERED By 458]
• 456.: Trower to Ricardo2[reply to 447.—ANSWERED By 461]
• 457.: Ricardo to Wheatley1
• 458.: Ricardo to Malthus1[reply to 455.—ANSWERED By 459]
• 459.: Malthus to Ricardo1[reply to 458.—ANSWERED By 460]
• 460.: Ricardo to Malthus1[reply to 459.—ANSWERED By 462]
• 461.: Ricardo to Trower1[reply to 456.—ANSWERED By 466]
• 462.: Malthus to Ricardo2[reply to 460.—ANSWERED By 463]
• 463.: Ricardo to Malthus1[reply to 462.—ANSWERED By 467]
• 464.: Ricardo to Mill1[answered By 469]
• 465.: Tooke to Ricardo1
• 466.: Trower to Ricardo3[reply to 461.—ANSWERED By 471]
• 467.: Malthus to Ricardo2[reply to 463.—ANSWERED By 468]
• 468.: Ricardo to Malthus1[reply to 467]
• 469.: Mill to Ricardo2[reply to 464.—ANSWERED By 470]
• 470.: Ricardo to Mill2[reply to 469]
• 471.: Ricardo to Trower2[reply to 466.—ANSWERED By 478]
• 472.: Ricardo to Mcculloch 2
• 473.: Ricardo to Mill1
• [enclosure: Ricardo’s Notes On Mill’s Elements of Political Economy]
• 474.: Mcculloch to Ricardo2[reply to 436 & 439.—ANSWERED By 476]
• 475.: Maria Edgeworth to Ricardo2
• 476.: Ricardo to Mcculloch1[reply to 474.—ANSWERED By 479]
• 477.: Maria Edgeworth to Ricardo1
• 478.: Trower to Ricardo2[reply to 471.—ANSWERED By 481]
• 479.: Mcculloch to Ricardo2[reply to 476.—ANSWERED By 483]
• 480.: Mcculloch to Ricardo1[answered By 483]
• 481.: Ricardo to Trower1[reply to 478]
• 482.: Ricardo to Sinclair1
• 483.: Ricardo to Mcculloch2[reply to 479 & 480.—ANSWERED By 484]
• 484.: Mcculloch to Ricardo3[reply to 483.—ANSWERED By 486]
• 485.: Mcculloch to Ricardo1[answered By 486 & 491]
• 486.: Ricardo to Mcculloch1[reply to 484 & 485.—ANSWERED By 495]
• 487.: Ricardo to Trower1
• 488.: Ricardo to Say1[reply to 446.—ANSWERED By 496]
• 489.: Ricardo to Foster2
• 490.: Ricardo to Trower1
• 491.: Ricardo to Mcculloch2[reply to 485.—ANSWERED By 495]
• 492.: Ricardo to Trower2
• 493.: Ricardo to Hodgson1
• 494.: Ricardo to Mcculloch1
• 495.: Mcculloch to Ricardo1[reply to 486 & 491.—ANSWERED By 497]
• 496.: Say to Ricardo2[reply to 488]
• 497.: Ricardo to Mcculloch3[reply to 495]
• 498.: Say to Ricardo1
• 499.: Ricardo to Trower1
• 500.: Ricardo to [cowell]1
• 501.: Ricardo to Trower1
• 502.: Ricardo to Maria Edgeworth1[answered By 510]
• 503.: Mcculloch to Ricardo1[answered By 504]
• 504.: Ricardo to Mcculloch2[reply to 503]
• 505.: Ricardo to Mill1
• 506.: Ricardo to Mill1
• 507.: Ricardo to Mill1
• 508.: Ricardo to Mill1
• 509.: Ricardo to Mill1
• 510.: Maria Edgeworth to Ricardo2[reply to 502.—ANSWERED By 511]
• 511.: Ricardo to Maria Edgeworth1[reply to 510.—ANSWERED By 514]
• 512.: Ricardo to Trower1
• 513.: Ricardo to Malthus3
• 514.: Maria Edgeworth to Ricardo2[reply to 511.—ANSWERED By 515]
• 515.: Ricardo to Maria Edgeworth1[reply to 514]
• 516.: Ricardo to Mill1
• 517.: Ricardo to Trower1
• 518.: Mcculloch to Ricardo1[answered By 520]
• 519.: Maria Edgeworth to Ricardo2extract of a Letter From Paris
• 520.: Ricardo to Mcculloch1[reply to 518]
• 521.: Ricardo to Goldsmid2
• 522.: Ricardo to Mill1
• 523.: Ricardo to Malthus3
• 524.: Ricardo to Mcculloch2[answered By 526]
• 525.: Ricardo to Grote1
• 526.: Mcculloch to Ricardo1[reply to 524]
• 527.: Trower to Ricardo3[answered By 533]
• 528.: Ricardo to Maria Edgeworth1
• 529.: Ricardo to Malthus1
• 530.: Ricardo to Mcculloch1[answered By 541]
• Blake to Mcculloch1
• 531.: Ricardo to Malthus1[answered By 532]
• 532.: Malthus to Ricardo2[reply to 531.—ANSWERED By 536]
• 533.: Ricardo to Trower2[reply to 527.—ANSWERED By 547]
• 534.: Trower to Ricardo2[answered By 535]
• 535.: Ricardo to Trower1[reply to 534.—ANSWERED By 547]
• 536.: Ricardo to Malthus1[reply to 532.—ANSWERED By 540]
• 537.: Ricardo to Mill1[answered By 539]
• 538.: Ricardo to Mcculloch1[answered By 541]
• 539.: Mill to Ricardo3[reply to 537.—ANSWERED By 548]
• 540.: Malthus to Ricardo1[reply to 536.—ANSWERED By 542]
• 541.: Mcculloch to Ricardo1[reply to 530 & 538.—ANSWERED By 543 & 544]
• 542.: Ricardo to Malthus1[reply to 540.—ANSWERED By 545]
• 543.: Ricardo to Mcculloch1[reply to 541]
• 544.: Ricardo to Mcculloch1[reply to 541.—ANSWERED By 546]
• 545.: Malthus to Ricardo1[reply to 542.—ANSWERED By 550]
• 546.: Mcculloch to Ricardo1[reply to 544]
• 547.: Trower to Ricardo1[reply to 533 & 535.—ANSWERED By 549]
• 548.: Ricardo to Mill1[reply to 539]
• 549.: Ricardo to Trower1[reply to 547.—ANSWERED By 551]
• 550.: Ricardo to Malthus1[reply to 545]
• 551.: Trower to Ricardo1[reply to 549.—ANSWERED By 553]
• 552.: Ricardo to Mill1
• 553.: A. Austin to Trower1[reply to 551]
• 544.: A. Austin to Trower2
• 555.: Mill to Mcculloch1

488.

ricardo to say1
[Reply to 446.—Answered by 496]

London 5 March 18222

Dear Sir

I have received the letter which you kindly sent to me in answer to mine of May last. I am much indebted to you for the trouble you have taken in explaining your view of the subject of value, and I am happy to observe that the difference between us is much less than I had hitherto considered it. You speak of two different utilities which commodities possess, one, which they derive from nature, without any of the labour of man, the other, which they derive exclusively from his labour. You say that for the first of these, which you call natural utility, nothing valuable can be obtained in exchange, and it is only for that portion of utility which is given to a commodity by labour or industry, for which any thing valuable can be obtained. You add “mais en Economie Politique nous ne pouvons nous occuper que de la portion d’utilité qui a eté donné avec des frais.[”] You explain on these principles the case I had put to you of a pound of iron and a pound of gold, which I had supposed had exactly the same utility, though the gold was 2000 times more valuable. If we give 2000 times more for the gold than the iron, you say, it is because that particular utility of which only Political Economy treats, namely that given by labour, is 2000 times greater than that given to iron, and you add that the iron has 1999 portions of natural utility for which nothing is given; of which the gold has none.

Although I cannot quite approve of the terms used to explain this truth, yet I do now, and always have substantially agreed in the reasoning which proves it, for I have always contended that commodities are valuable in proportion to the quantity of labour bestowed upon them, and when you say that they are valuable in proportion as they are useful, and they are useful in proportion to the quantity of labour or industry bestowed upon them, you are in fact expressing the same opinion in other words.

It follows from your doctrine that if by any1 process, of the 2000 portions of the utility given to gold by labour, 1000 portions were given to it by nature, and the other 1000 portions by labour, gold would fall to one half of its former exchangeable value. But would a pound of gold form the same portion of riches as before? you would be bound to say it would not, because you say riches do not depend on quantity but on value. I, on the contrary, who do not estimate riches by value, but by the whole quantity of utility which the commodities which constitute riches possess, from whatever source derived, whether from nature or from industry, should say that I was equally rich in the possession of a pound of gold after the discovery of the economical process, although my riches would be of only half their former value. In saying so I should be justified by various passages in your different works. In your last edition of The “Catechisme”2 you say Page 2 that the riches of a person are in proportion to the value of the commodities which he possesses, and not in proportion to their quantity: so far you repeat the same opinion, but when your pupil calls upon you to explain what is the measure of the value of things, your answer that it is the quantity of all other things that the proprietor is enabled to command by their means, if he consents to exchange them. Now in this I think there is a contradiction, for we are told that riches are in proportion to value, and value in proportion to the quantity of things, therefore riches are in proportion to the quantity of things; and yet you say that riches are in proportion to value, and not in proportion to the quantity of things.1

Let us suppose that the same cause, namely, an economical process, which lowers the value of gold one half, lowers at the same time, in the same degree, and by the same means, hats, shoes, cloth, and linen. In this state of things a pound of gold will command just as many hats, shoes, cloth, and linen as before any of the economical processes were discovered. I ask is the man equally rich as before who has a pound of gold? you first answer no, because he has not a commodity of equal value, and you secondly answer yes, because he can command an equal quantity of various other commodities.

In your letter to Mr. Malthus you say, very justly, that if corn and woollen goods be produced with so much facility, that with their former cost in productive services, double the quantity be produced, they will fall one half in value. You consider value as the measure of riches, and yet you say that a person getting in exchange a double quantity of these woollen goods and corn gets a larger portion of riches. [“] Les produits1 , dans un tel echange, sont mis en opposition de valeur avec les services productifs; or, comme en tout echange, l’un des deux termes vaut d’autant plus qu’il obtient une plus grande quantité de l’autre, il resulte que les services productifs valent d’autant plus que les produits sont plus multipliés, et a plus bas prix. Voila pourquoi la baisse des produits, en augmentant la valeur des fonds productifs d’une nation et des revenus qui en émanent, augmente les richesses nationales. Cette demonstration qui se trouve en detail au chap 3 du liv. 2 de mon Traité d’economie politique (4^e edition [)] a rendu ce me semble, quelque service a la science, en expliquant ce que jusque-la avait eté senti sans etre expliqué, c’est que bien que la richesse soit une valeur exchangeable, la richesse generale est accrue par le bas prix des marchandises et de toute espece de produits.[”] Double the production of A, B, C and D by economical processes and you do not augment the riches of either, but collectively they are nevertheless doubly as rich as before. Surely in this explanation the words riches and value are not always used in the same sense. According to my view they would be singly and collectively doubly rich, but their riches would not have increased in value: they would not increase in value, because they would have no more of that utility, given exclusively by labour.

On the other point respecting the circumstances which make two loaves raised on land of unequal fertility of equal value, although the rent derived from them will be different, we in many respects agree. Rent is the effect of the monopoly of land of a certain fertility, and must rise with the value of the loaf, and with the difficulty of producing additional loaves. But the last loaf produced pays little or no rent, and its value, as well as the value of all other loaves, rises, because a greater quantity of its utility is derived from labour and industry, and a smaller quantity from natural means. You say demand and supply regulates the price of bread; that is true, but what regulates supply? the cost of production,—the quantity of utility imparted to bread by industry. Rent is the effect of high price, not the cause. In some loaves there must necessarily be little rent, I should say no rent at all. You say bread is regulated in value by productive services, true but in some bread of five shillings value the productive services may be divided thus Rent 2/- Profit 1/- and labour 2/- and in another equal quantity of bread of the same value they may be divided as follows Rent nothing, Profit 1/- and labour 4/-. I object to the lumping the productive services altogether, I want to know the part which each performs in giving value to bread.1

At the last meeting of our Political Economy Club, I read your letter, for which I was desired to return you the thanks of the meeting.2 —Our society is a very unpretending one, and had made no provision for the admission of Honorary members—they have now however passed a law to admit foreigners only in that character, and I am happy to inform you that we have elected you unanimously. We hope in good time to elevate ourselves from a “Club” to a more dignified title, and to become a numerous as well as a scientific body.—

I have received from Mr. Place the 2^d. Edition of your Catechisme D’Economie Politique1 for which I am very much obliged to you.—I have not yet had time to look at more than the 2 first chapters,—I promise myself pleasure and instruction from the perusal of the remainder.—

I remain Dear Sir with the greatest esteem Your faithful servant

David Ricardo

[1 ]MS in the possession of M. Raoul-Duval (with two MS notes by Say).—Mélanges, pp. 123–30; Œuvres diverses, pp. 423–6 (in French translation).—A copy, identical with Ricardo’s original but not in his handwriting and dated 3 March 1822, in R.P.; it was printed in Minor Papers, pp. 190–94.

Ricardo had written this letter a month before and read it to the Political Economy Club on 4 Feb. 1822; see above, p. 154 and below, p. 172, n. 2.

[2 ]Replaces ‘3’.

[1 ]‘economical’ is ins. here by Say in the MS.

[2 ]The second edition; see the close of this letter.

[1 ]Note in Say’s handwriting attached to the MS: ‘Mr. Ricardo trouve là un paralogisme parce qu’il fait abstraction du possesseur, dont je ne fais jamais abstraction. Je dis que la richesse est en proportion de la valeur de ce que l’on possède, et la valeur de ce que l’on possède en proportion de ce que l’on peut acquérir. Je ne pense pas que l’on puisse parler de la richesse absolument, j’entends de la richesse dont s’occupe l’Economie politique qui est toujours relative.’ Cp. below, p. 189.

[1 ]In MS, by a slip of the pen, ‘services’; corrected by Say on the MS to ‘produits’, as it is in Lettres à Malthus, p. 57.

[1 ]Note in Say’s handwriting attached to the MS: ‘Je ne dis pas que les services productifs seuls determinent le prix du pain; ils déterminent l’offre; mais le prix n’est pas le resultat de l’offre seule. Il est le resultat de l’offre combinée avec la demande. Or c’est le besoin qu’on a de pain accompagné de l’offre de le payer au prix où l’on en demande une quantité quelconque, qui est ce que j’appelle la quantité demande ou l’autre element du prix.

‘Si le besoin de pain est tel qu’on en demande une quantité de...à 5 Shillings; et que le travail pour créer cette quantité de pain coûte dans un terrain determiné2 Shillings, l’interet du capital 1Sh. le profit de la terre (Rent) sera 2.

‘Si le besoin est moins grand ou la societé moins riche au point que l’on ne puisse plus demander la même quantité de pain qu’au prix de 3 Sh. alors il y aura 2Sh pour le travail: 1pour le capital et rien pour la terre.

‘Je ne dis pas Bread is regulated in value by productive services, je dis: Supply is regulated by productive services, but supply is only one of the elements of price.’

[2 ]At the meeting on 4 Feb. 1822, ‘a letter from M. Say to Mr. Ricardo was read on the difference of opinion between them relative to Wealth and Exchangeable Value, as well as the answer of Mr. Ricardo. The thanks of the Club were voted to both gentlemen for their communications’. On the same occasion Swinton Holland proposed Say as an honorary member; he was elected at the next meeting, on 4 March (Political Economy Club, Minutes of Proceedings, 1821–1882, pp. 46–7). Apparently Ricardo kept his letter for a month before despatching it so that he might announce Say’s election.

[1 ]Catéchisme d’économie politique..., ‘Seconde édition entièrement refondue et augmentée de Notes en faveur des personnes qui veulent approfondir davantage les principes de cette science’, Paris, Bossange, 1821.