Front Page Titles (by Subject) 552.: ricardo to mill1 - The Works and Correspondence of David Ricardo, Vol. 9 Letters 1821-1823
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552.: ricardo to mill1 - David Ricardo, The Works and Correspondence of David Ricardo, Vol. 9 Letters 1821-1823 
The Works and Correspondence of David Ricardo, ed. Piero Sraffa with the Collaboration of M.H. Dobb (Indianapolis: Liberty Fund, 2005). Vol. 9 Letters 1821-1823.
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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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ricardo to mill1
Gatcomb Park 5 Sepr. 1823
My Dear Friend
John’s paper2 does not quite remove our difficulty. He acknowledges that “profits are only the wages of a particular kind of labour”. Commodities vary then with the wages of this kind of labour—or rather they vary in proportion as the wages of the two kinds of labour affect them. If so, they do not vary in proportion to the quantity of labour employed on them, but in proportion to the wages paid for such labour. Commodities being made up of wages and profits, they vary in the degree that varying wages and profits may affect them.
It is true that the profits received by a man who keeps wine for a great number of years is no more than equivalent to what another man receives under another form, and immediately. We all agree with respect to the facts, but it is impossible to say that the value of commodities is proportioned to the quantity of labour employed upon them. A pipe of wine is double the value of a piece of cloth! and let me grant that it is so because double the quantity of labour is expended on it. No alteration takes place in the quantity of labour employed on either commodity, and yet wine rises to be as 2 to the cloth. Nothing has occurred but an alteration in the wages of the two species of labour. Commodities alter then in relative value not on account only of an alteration in the quantity of labour expended on them but also on account of the variation in the wages given for these two species of labour. Malthus supposes a man to pick up a certain number of grains of gold in a day, and no change to take place in the produce obtained by his labour, but that he always picks up the same quantity precisely. I suppose the same number of grains of gold to be produced in a year by the two species of labour. If we value the wine and the cloth in these two equal quantities of money before and after the variation of wages and profits they will appear to have varied in very different degrees. In which ought we to value them? Malthus says in his, because his is an invariable measure of value, always having the same quantity of labour employed on it. I say in mine, because mine also has always the same quantity of labour bestowed on it. In his measure there enters no profit, in mine there does.
Does not John mean that a commodity produced by the labour of one man for twelve months is of equal value with a commodity produced by the labour of 12 men in one month? If that is his meaning, he is in an error; the commodity produced in the twelve month will be the most valuable and the degree in which it will be so will depend on the rate of profits,—it would be more if profits were 10 pct. than when they fell to 5 pct.. With which shall we measure all things, with the commodity produced in 12 months or in one month, with the commodity produced in 5 years or that produced in one day? Say which you give the preference to, and why. I am persuaded that the selection must be arbitrary,—that they are all imperfect measures, and yet there are good reasons why amongst them one should be selected and why that one should be the commodity produced in a year.
My principal objection against John is that he proposes to prove that commodities are valuable in proportion to the quantity of labour expended on them, and then proves that capital is another name for labour; profit a name for the wages of that labour; and therefore commodities are valuable in proportion to wages of all descriptions paid for the production of them. Is not this to say that the value of commodities depends upon the value of wages and profits? If he said so he would say what is true, but the proposition is a different one from that which he first advances.
The four salmon, caught with a net, which has cost one days labour, will exchange for more than 2 deer, for the same reason that the labour of one man for twelve months is worth more than the labour of twelve men for one month; and eight salmon caught with a net made in a day, and which will last 2 days, are worth more than three deer; and therefore “capital enters into value otherwise than labour in a particular form and is paid at a different rate with immediate labor”. I do not know whether I have made myself understood. John does not allow for profits increasing at a compound rate. The profits for 5 years are more than 5 times the profits of one, and the profits of one year more than 52 times the profits for one week, and it is this which makes a great part of the difficulty. Beg him to consider this and to let me know if I am wrong in my critique on his paper. I have been thinking a good deal on this subject lately but without much improvement—I see the same difficulties as before and am more confirmed than ever that strictly speaking there is not in nature any correct measure of value nor can any ingenuity suggest one, for what constitutes a correct measure for some things is a reason why it cannot be a correct one for others.—
[1 ]Addressed: ‘J. Mill Esqr / East India House / London’. Franked by Ricardo: ‘Minchinhampton September Five 1823’. London postmark, 6 Sept. 1823.
[2 ]This paper has not been found. It is a curious coincidence that the Morning Chronicle of the same date as this letter contains an unsigned article by John Stuart Mill on the Measure of Value (cp. the list of his writings mentioned above, IV, 7, n. 1); this, however, is a review of Malthus’s pamphlet and does not contain the points discussed by Ricardo in the letter.