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• Introduction
• Textual Introduction
• Acknowledgments
• Essays On Economics and Society 1824–1845
• War Expenditure 1824
• The Quarterly Review On Political Economy 1825
• The Corn Laws 1825
• Paper Currency and Commercial Distress 1826
• The Silk Trade 1826
• The New Corn Law 1827
• The Nature, Origin, and Progress of Rent 1828
• The Currency Juggle 1833
• Corporation and Church Property 1833
• Miss Martineau’s Summary of Political Economy 1834
• Essays On Some Unsettled Questions of Political Economy 1844
• Editor’s Note
• Preface
• Of the Laws of Interchange Between Nations; and the Distribution of the Gains of Commerce Among the Countries of the Commercial World
• Of the Influence of Consumption On Production
• On the Words Productive and Unproductive
• On Profits, and Interest
• On the Definition of Political Economy; and On the Method of Ainvestigation Proper to Ita
• The Currency Question 1844
• The Claims of Labour 1845
• De Quincey’s Logic of Political Economy 1845

THE QUARTERLY REVIEW ON POLITICAL ECONOMY

1825

EDITOR’S NOTE

Westminster Review, III (Jan., 1825), 213-32. Unsigned; not republished. Original heading: “Art. IX. The Quarterly Review, No. LX. Art. 1. On the Essay on Political Economy, in the Supplement to the Encyclopaedia Britannica.” Running heads: “Periodical Literature.—Quarterly Review./Political Economy.” Identified in JSM’s bibliography as “A review of an Article on Political Economy in the Quarterly Review—in the fifth number of the Westminster Review” (MacMinn, 6). The article is not mentioned in JSM’s Autobiography; it is identified as JSM’s in the Somerville College copy, without corrections or variants.

The article in the Quarterly is by Malthus; the essay in the Britannica is by McCulloch. JSM’s review is part of the continuing attack on the Quarterly and the Edinburgh which helped establish the reputation of the Westminster. The tone of the article suggests that JSM is being consciously ironical in accusing the “Reviewer” (Malthus) of not being sufficiently Malthusian; there is, however, no external evidence to support the suggestion.

The Quarterly Review on Political Economy

had this article been particularly good, we might have left it to work its way by itself. Had it been bad, after the usual manner of the Quarterly Review, begging every question on the side of power, we should not have thought it necessary to add any thing to the exposure which we have already given of this branch of the aristocratic logic. It happens, however, that while the article is as bad as might naturally be expected, considering the quarter from which it comes, there are peculiarities in its badness, which take it out of the ordinary run of Quarterly Review articles.

The object of the writer, as described by himself, is, to upset what he terms the “new school of political economy;”^[*] of which school he is pleased to consider the very able essay^* which he has taken for his text, as the manual. His predictions, with respect to the future fate of this school, are sufficiently appalling. He threatens them with a downfal similar to that of the French Economists, between whose system and theirs, he has discoverd that there is a remarkable similarity; a piece of information which is as new to us as his menaces are alarming. We learn that they, to their unspeakable confusion, have set at nought the wisdom of their ancestors, and “altered the theories of Adam Smith upon pure speculation”^[†] (it would, indeed, have been somewhat surprising if they had altered them on any other ground). It was fitting that such unparalleled temerity should not escape unchastised. Happily, the old and orthodox faith was not left altogether destitute, for our author remained. It was reserved for him to carry back the science to its fountainhead—to restore the legitimate rule of Adam Smith, or, as he afterwards expresses it, of “Adam Smith and Mr. Malthus.”^[*]

A writer who praises what is old and condemns what is new, is exactly suited to the Quarterly Review; and, considering him merely in the capacity of a Quarterly Reviewer, we are only surprised that he should have pitched upon Adam Smith as the object of his idolatry; a writer who, whatever may be his other merits, cannot lay claim to that of being two centuries old; and who not only did his utmost to promote an object so alien to the conceptions and wishes of a Quarterly-Reviewer, as the improvement of the great mass of mankind, but pursued that object by means which he cannot but regard as abominable; by pointing out the defects of existing institutions, and suggesting remedies. If it was absolutely necessary to have a system, to set up in opposition to the new-fangled doctrines of later times, a purer source might have been found from whence to derive it; and the writings of St. Athanasius, St. Jerome, and St. Augustin, if read with faith, would, doubtless, have afforded thirty-nine articles of political economy, untainted with the poison of modern sedition and impiety. Unfortunately, however, man is presumptuous, and will use his reason, unconscious that he is playing with edge-tools, and unmoved by the dangers with which he is threatened by his masters in this world and by his pastors in the next. In vain does the anxious tenderness of the Quarterly Review represent to him, that the reason, on which he so arrogantly prides himself, was given by a benevolent Providence on purpose to delude and mislead him; that the only safe standard of belief is the faith of his fathers; and that, although the insufficient records of early times do not permit us to mount up to the creation of the world, and ascertain what were the opinions of Adam on the subject of political economy, it is our duty to approach as near to that summit of orthodoxy as we can. Instead of listening to these pious exhortations with the reverence and submission which they deserve, the reader breaks out into a blasphemous laugh, and shuts the book; for we live in an incredulous age, and we are even informed that there are some (we say it with horror) who doubt the whole Athanasian creed, and dispute the divine authority of tithes. Being unable, therefore, to do what they would, the Reviewers wisely content themselves with doing what they can. Being unable to drag back the public mind five thousand years, they are fain to try whether they can drag it fifty.

To do them justice, they resisted Adam Smith, as long as they could do so without falling into utter contempt. When the reputation of the “Wealth of Nations”^[*] was not so well established as it now is, they called it “a tedious and hard-hearted book, greatly over-valued, even on the score of ability;”^[†] it considered man (they said) in the light of a “manufacturing animal,” and estimated his importance by the gain which can be extracted from him; nay, we almost shudder at the treatment which it inflicted upon him, since it actually “plucked the wings of his intellect,” and “stripped him of the down and plumage of his virtues.”^[‡] Mr. Malthus, too, at that period surpassed, if possible, even Adam Smith in criminality; and it was with difficulty that they could find language adequate to express guilt of so black a dye. They described his reputation as disgraceful to the age; they made a collection of the most approved epithets, expressive of all the varieties of wickedness or folly, and heaped them on his devoted head.^* Unfortunately, however, both Adam Smith and Mr. Malthus proved too strong for the Quarterly Review; and now that the public mind has got beyond them, the Quarterly Review courts an alliance even with such monsters of depravity, rather than tolerate that unholy spirit of progression which is so unhappily conspicuous in the human species.

This, we say, is quite in character, and can surprise no one; and if the present article had contained nothing more extraordinary, we should not have thought it worthy of a lengthened notice in our pages. But this is far from being the case; and the article is altogether so great a curiosity, that we could not refrain from drawing to it the attention of our readers.

When we commenced the perusal, we were considerably startled at the remarkable similarity of the style to that of Mr. Malthus himself; nor was our surprise lessened when we found the Reviewer to be a professed advocate of several opinions, which we had hitherto imagined to be held by Mr. Malthus exclusively. Whatever suspicions, however, we might have formed at the beginning of the article, they were effectually dispelled before we arrived at the close; nor was it long before we discovered that this writer, under the mask of a devoted adherent of Mr. Malthus, is, in reality, his concealed enemy, and affects to defend his doctrines, merely to have an opportunity of exhibiting them and him in a ridiculous and contemptible attitude. In this attempt, candour constrains us to own that he has completely succeeded: for the article is precisely such as the bitterest enemy of Mr. Malthus would have wished him to write; and the imitation is so close, that even we, who believe ourselves to be tolerably well versed in Mr. Malthus’s writings, were, for a time, deceived by it. Not having heard, however, that Mr. Malthus has yet publicly disavowed the opinions which are here put forward as his, or disclaimed connexion with the Reviewer, whom he probably deems altogether unworthy of his notice, we are apprehensive lest some incautious reader, misled by the confident tone of the Reviewer, and by the air of sincerity which finely characterises his irony, should unguardedly conclude that he is in earnest, and should mistake this grave piece of raillery for a serious exposé of Mr. Malthus’s opinions. Few persons are inclined to allow a larger scope to wit and ridicule than ourselves; but when wit and ridicule assume so malignant a form, we should be wanting in our duty, if we did not come forward to unmask the cheat and put the public on their guard.

Among not a few other difficulties, however, with which we shall have to contend in the execution of our design, one, and that one not the least considerable, is the impossibility of making the malicious accuracy of the imitation perceptible to those who are but imperfectly acquainted with the original; a description of persons including, we are greatly apprehensive, a very considerable proportion of the public. Few, we fear, of our readers can boast, like ourselves, of having effected the reading of Mr. Malthus’s “Measure of Value,”^[*] and of his “Principles of Political Economy.”^[†] It is indeed a task by no means lightly to be engaged in, and upon which we cannot advise any person to enter without being aware what it is which he undertakes. For if Mr. Malthus excels in any thing, it is not certainly in smoothing the road to knowledge; and if any truths are contained in the works to which we have alluded, they must be of the number of those truths which lie hidden in the bottom of a well.

On reflection, however, it occurred to us, that if few have read Mr. Malthus, it is only the more necessary that some person who has read him should step forward to vindicate his reputation from the calumnious insinuations of this pretended disciple; who not only puts forward Mr. Malthus’s peculiar doctrines in such a manner as actually to direct the assailant to all the points most open to attack; but affects to consider as the opinions of Mr. Malthus, opinions utterly inconsistent with, and even contrary to, those which that gentleman has always professed to hold: nor does he stop here, but while he copies implicitly all the mistiness of Mr. Malthus’s style, he never lets slip an opportunity of throwing in, by a side wind, some concealed joke at Mr. Malthus’s expense.

Thus, because certain Political Economists differ somewhat from Mr. Malthus, he dubs them the “new school,” thereby intimating, that Mr. Malthus’s doctrines are exploded and out of date; and he takes a malicious pleasure in coupling Mr. Malthus with Adam Smith; a compliment for which Mr. Malthus cannot be too grateful, as it implies that all the discoveries of modern Political Economists are thrown away upon him, and that he has not yet advanced beyond the founder of the science. It may appear presumptuous to suppose, that so great a master of ridicule as this writer can stand in need of any suggestions that we can give, for the better amusement of his readers; but, we think, that in attempting to twist the systems of Mr. Malthus and of Adam Smith into concordance, to be serious would have been by far the best joke which he could have devised. The difficulty of serving God and Mammon is proverbial, but it is a mere trifle in comparison with that of reconciling Mr. Malthus and Adam Smith: the former difficulty, whatever it may once have been, the experience of modern times has proved to be by no means insuperable.

The Reviewer proceeds, with well-feigned gravity, to criticise the doctrines of the “new school.” To say that he attempts to criticise them without knowing any thing about them, would be to say very little: since it would, on the contrary, be much more surprising, were a Quarterly-Reviewer to be found, who did know any thing about any subject which requires any intellect, or is of any importance to mankind. It is not, therefore, the blunders of this writer, which we wish especially to be remarked, but the sang-froid with which he lays all of them to the charge of Mr. Malthus, by pretending to fight on his side, and to be the enemy of his enemies.

He afterwards (p. 332) continues:

We have been accustomed to believe that political economy, which was left, even by Adam Smith, in a state of great vagueness and uncertainty, had been raised to the rank of a science chiefly by three discoveries: the principle of population, the theory of rent, and Mr. Ricardo’s theory of foreign commerce. If these discoveries be thought to constitute a school, Mr. Malthus must certainly be considered a leading member of that school: of the first, and most important of the three principles which we have named, he is generally believed to have been the discoverer; of the second he has furnished one of the earliest expositions. Doctrines which make such havoc with the faith of our fathers, might naturally have excited the wrath of the Quarterly Review: and the duller geniuses among the orthodox, who cannot understand a joke, will wonder that in a professed attack upon the “new school,” it should have passed over the most essential doctrines of that “school;” but it is easy to see, that to refute their opinions, or any opinions, was the last thing which this writer had any thought of: all he sought was to ridicule Mr. Malthus, whom he wished to represent as actually not knowing what their essential doctrines are.

As for the three propositions which the Reviewer has hit upon, to distinguish the “new school” from that of Adam Smith and Mr. Malthus, the two last, as here stated, never were maintained by them at all: while the first, into which he resolves both the others, and which he holds up as the most important of all their doctrines, happens to be the least important; and so far is it from being true, as he asserts, “that all the peculiar doctrines of the new system directly and necessarily flow” [p. 332] from this proposition, that not one of their doctrines, nor, so far as we know, of any other doctrines, flows from it at all; it being, in truth, more a question of nomenclature and classification than one from which any important consequences are deduced. Granting, therefore, that the Reviewer has completely demolished these three propositions—two of which, indeed, we freely concede to him—all the fundamental principles of the “new school” remain untouched.

It must be owned, indeed, that Mr. Malthus is peculiarly sensitive on every thing which regards his measure of value; a discovery, indeed, which he appears to cherish the more fondly, as no one, except himself, seems to be capable of appreciating it: but it is too much to attempt to persuade the public that Mr. Malthus is so wrapt up in the importance of his supposed discovery, as actually to believe that these insignificant disputes about value are the most important questions in political economy, questions upon which every thing depends—questions of more consequence than the theories of rent, profits, and foreign trade!

We will now go a little deeper into the subject, and see what this pseudo-Malthusian has to say on each of the topics aforesaid. For this purpose we will follow his example, and begin with the first of the three principles; “That the quantity of labour worked up in commodities determines their exchangeable value.” [P. 307.]

The doctrine which our Reviewer comes out with, in opposition to this principle, proves how accurately he has imitated his great original: for it is no less than Mr. Malthus’s favourite doctrine, with which all who have read his “Measure of Value” are familiar—that value depends upon labour and profits:^[*] a proposition which he supports in the following terms:—

Now this is all very true, but “we think we have heard all this before:” it is, in truth, the old doctrine, about the influence of time on value; and we think our readers will admit that it is at least as clearly and as forcibly stated in the following passage, as it is by the Reviewer:—

Now, to what author does the reader suppose we are indebted for this passage? To Mr. Malthus, or to Adam Smith? No: to Mr. Ricardo!^*

So much for the novelty and importance of the Reviewer’s first objection to Mr. Ricardo’s doctrine of value. His second objection is, that “the quantity of profits which enters into the composition of commodities is greatly increased in all cases of an increase of fixed capital as compared with circulating:”^[*] this also, he himself admits to be “universally acknowledged:”^[†] indeed, Mr. Ricardo says, “This difference in the degree of durability of fixed capital, and this variety in the proportions in which the two sorts of capital may be combined, introduce another cause, besides the greater or less quantity of labour necessary to produce commodities, for the variations in their relative value: this cause is the rise or fall in the value of labour.” Principles of Political Economy [3rd. ed.], pp. 25-6.

So far, then, it seems, all parties are agreed; and further objection, under this head, our Reviewer has none.

What then is this great question upon which we are to believe that the whole science depends? simply, as we have already observed, a question of nomenclature: the question, whether these facts, about which all are agreed, shall be contained in one expression or another; whether this effect of time, and this effect of fixed capital, are ultimately resolvable into labour, and are included in the simple expression that value depends upon quantity of labour, or not: a question of pure curiosity, and of no practical use whatever. Yet this is the question upon which our pseudo-Malthusian pretends to believe, that the whole of the peculiar doctrines of the “new school” depend!^*

It is very well, if a Reviewer chuses to make a great noise about nothing. It is no novel practice, certainly, with Reviewers; and as little so with Quarterly, as with any other Reviewers; but it is hard that Mr. Malthus should be held responsible for all the ignorance and confusion of ideas which the Reviewer chuses to impute to him, and should be deemed incapable of distinguishing between a question about words and a question about things, merely to afford a good joke to a Quarterly-Reviewer.

We have already remarked, that the second of the three propositions which the Reviewer puts into the mouth of the new school, “that demand and supply have no influence on prices and values except in cases of monopoly, or for short periods of time”,^[*] never was maintained by them at all. They not only allow that demand and supply have some influence on value, but they assert that nothing else has any influence whatever, except in as far as it may be calculated to affect either the demand or the supply. When they say that cost of production regulates value, it is only because cost of production is that which regulates supply. If there be two commodities, produced by equal cost, what is the reason that they exchange for one another? The reason is, because if one of the two bore a higher value than the other, when the cost of production is the same, the profits of the two producers would be unequal, and it would be the interest of one of them to withdraw a portion of his capital from his own business and transfer it to that of the other; thus increasing the supply of the dearer commodity, diminishing that of the cheaper, until the equality of values is restored: and restored, as the reader will observe, not in contradiction to the principle of demand and supply, but in consequence of it. “It thus appears,” says Mr. Mill (Elements of Political Economy, 2nd Ed. pp. 88-9) “that the relative value of commodities, or, in other words, the quantity of one which exchanges for a given quantity of another, depends upon demand and supply, in the first instance, but upon cost of production ultimately, and hence, in accurate language, upon cost of production entirely.”

It is true that a variation in productive cost frequently takes place, and produces a corresponding variation in value, without any actual alteration of supply; that an increase, for instance, of the productive cost of an article, raises its value without necessarily diminishing the supply, because all the parties concerned, whether as sellers or as purchasers, know that if the rise of value does not take place without a limitation of supply, it must take place by such a limitation. If, for example, a duty of a shilling per yard were imposed upon cloth, the dealers, in all probability, would quietly lay an additional shilling upon every yard of cloth which they might sell; and it would not necessarily follow that any capital would be withdrawn from the manufacture of cloth; unless indeed the higher price had the effect of narrowing the demand, which is not improbable, but is altogether extrinsic to the question. Although, however, there would be no actual, there would even here be a potential limitation of supply; upon which potential limitation, not only something would depend, but every thing would depend; since cost of production itself would have no influence on value without it.

It is usual, indeed, to say that a fluctuation in demand and supply cannot have more than a temporary effect upon value: but this is merely because the fluctuation in the demand and supply must itself be temporary, unless accompanied by a change in cost of production. Could we suppose a permanent change in the proportion of the demand and supply to one another, independently of productive cost, value also would permanently vary, and cost of production would cease to have any influence over it. This, however, is to suppose the absence of free competition: an element which, in political economy, is always taken for granted unless otherwise expressed. There is not the smallest foundation, then, for the assertion, that the “new school” deny that values depend upon supply and demand.

But the malicious ingenuity of this Reviewer will not suffer Mr. Malthus to talk common sense, even when he is on the right side of the question: and though he is fighting shadows, yet even shadows baffle him, and drive him completely out of the field.

He begins by saying, that demand and supply, though they have no influence on labour, which is one of the ingredients of value, have an influence on profits, which is the other ingredient.^[*] To this proposition we shall not say whether we assent or not; for this reason, that previously to committing ourselves for or against a proposition, we usually endeavour to attach some meaning to it, which, in this case, we confess our inability to do. We think we know what is meant by the influence of demand and supply; the demand and supply of cloth have an influence on the value of cloth; the demand and supply of corn have an influence on the value of corn; but what is meant by “demand and supply” in the abstract, or what demand and supply it can be, which has an influence on profits, is a mystery which we cannot fathom.

When it has been our fate to peruse any of Mr. Malthus’s lucubrations on the more intricate subjects of political economy, we have remarked, that although they are in general sufficiently obscure, yet if there is one part of them which is more obscure than another, it is where he attempts anything like explanation or illustration. This peculiarity of Mr. Malthus our satirist has very happily seized; and so invariably has he adhered to the rule, that so soon as he begins to speak of throwing light upon a subject, from that moment we lose all hope of ever understanding it. Thus, under pretence of explaining the above proposition, which we thought had been of itself sufficiently incomprehensible, he has contrived to throw as thick a mist round it as would have sufficed to obscure the clearest demonstration in Euclid.

He begins by saying, that Mr. Ricardo has proved, that profits are determined by the proportion of the whole produce which goes to labour; this we at first thought we had understood; for we have read Mr. Ricardo’s work, and we know that he has proved that profits are determined by the proportion of the produce, which goes to the payment of wages: but we soon found what an egregious mistake we had committed, and how little we were capable of comprehending the fineness of our author’s satire. This, he goes on to state, is “only one important step in the theory of profits, which, of course, cannot be complete till we have ascertained the cause which, under all circumstances, regulates this proportion of the whole produce which goes to labour, immediate and accumulated.”^[*] Now, as he himself has expressly excluded (p. 309) all consideration of rents, we were not a little puzzled by this last proposition; since, in our humble conception, the whole of the produce, with the exception of rent, goes to the payment either of immediate or accumulated labour—either of the labourer or of the capitalist: it is evident, therefore, that in using the expression, “the proportion of the whole produce which goes to labour,”^[†] he cannot have meant, the proportion which goes to the payment of wages, but that in this mysterious phrase there lurks some recondite meaning, to which the Reviewer, oracle-like, withholds from us the key.

To ascertain, then, what it is which regulates the proportion of the whole produce which “goes to labour,” is his next object. The prevailing opinion he declares to be, that it depends upon the “greater or less demand for labour,”^[‡] compared, as we suppose, with the supply: in short, that wages depend upon the ratio between population and capital. This, however, we learn to be a vulgar error: the proportion of the produce which “goes to labour,” really depending not upon the demand and supply of labour, but upon the demand and supply of produce. “The specific reason which occasions a larger or smaller proportion of the produce of a given quantity of labour to go to labour, is the fall or rise in the value of the whole produce of such labour, resulting from the temporary or ordinary state of the supply, compared with the demand” (pp. 315-16).

We had been accustomed to believe, as we thought on pretty good grounds, and certainly in conformity with the doctrines of Mr. Malthus, in his Essay on Population,^[§] that the ratio between population and capital had been the regulator of wages: but we now learn it to be the value of the whole produce. Our satisfaction at the receipt of this new and unexpected information is greatly alloyed by the difficulty of comprehending it. We can understand what is meant by the value of cottons; namely, the quantity of other commodities for which a given quantity of cottons will exchange: we can understand in what manner cottons may rise or fall in value; namely, when a given quantity of cottons comes to exchange for a greater or less quantity of other commodities than before: but what is meant by the value of the whole produce, or how the whole produce of the land or labour of a country, or of the world, can be said to rise or fall in value, is a problem, of which we must leave it to wiser heads than our own to discover the solution. Value is a relative term: if it is not this, it is nothing: if any one talks about absolute value, or any other kind of value than exchangeable value, we know not what he means. One commodity may rise or fall in value, with respect to another; all commodities cannot rise or fall in value, with respect to themselves.

The Reviewer, however, thinks it incumbent upon him to know better, and the reader, we are sure, will join with us in admiring the originality and relevancy of the fact upon which his theory is founded. If cottons, says he, fall in value from abundant supply; of the cottons produced by the same quantity of labour, a greater proportion will be required to pay for that labour, and a smaller proportion will therefore remain for the capitalist; and, on the other hand, if cottons rise in value, from a diminished supply, a smaller proportion will suffice to pay the labourer, and a larger proportion will remain as profits to the capitalist.^[*] This is not only in itself altogether novel and of the highest importance, but seems to prove that (strange to relate!) the producer is benefitted by a high price of his goods—injured by a low one. The Reviewer next proceeds to generalize upon this grand discovery. The proportion, says he, of the whole produce which goes to labour, depends upon the value of produce.^[†] We at first regretted that he had not condescended to unfold to us the hidden process by which such a conclusion is drawn from such premises; but we speedily consoled ourselves with the reflection, that we have not lost much, since if he had, it is probable that we should not have understood him; nor, indeed, is there any just cause for wonder, that we should be unable to understand how a proposition is proved, when we cannot even comprehend the proposition itself.

In this chain of words, for we will not call them arguments, the experienced reader will not fail to recognize an exaggerated likeness of Mr. Malthus. Our anxiety, however, to convince him that we do not purposely conceal from him the connexion of ideas, but that we really give him the benefit of whatever meaning we can extract from those outward and visible signs of inward ideas, which, like other signs, frequently show themselves, when the reality which they are supposed to indicate does not exist, has induced us to withhold from him the best part of the joke; namely, a disquisition, of and concerning the “measure of value,” which the Reviewer has contrived to intermix with the above exposé, as a remedy apparently for its unnecessary clearness. The disquisition itself certainly leaves no reason for complaint on the score of too great perspicuity; nor indeed on that of logic; from the rules of which, this writer holds himself completely exempt. He begins by laying down as a principle the proposition which he has undertaken to prove; and though this one assumption ought in all conscience to have been sufficient, he does not stop here, but bravely reiterates it in a variety of shapes in every succeeding sentence to the close. The proposition, and the logic by which it is proved, are worthy of one another; and there could not be a more bitter piece of satire, both upon the principle itself and upon its author.

We now approach the third of the propositions which “more especially characterize the new school of political economy.”^[*] This is, as our readers have already been informed, “that the difficulty of production on the land is the regulator of profits, to the entire exclusion of the cause stated by Adam Smith, namely, the relative abundance and competition of capital.”^[†]

That the “new school” do not believe the “relative abundance and competition of capital” to be the regulator of profits, is no doubt true; nor do they even comprehend how there can be such a thing as competition of capital, unless it be competition for labour. Adam Smith supposed, that, when capital increased, the competition of capitalists induced them to lower their prices, and, by a necessary consequence, their profits. The “new school” dissent from this doctrine; first, because prices depend not upon the competition of capital, but upon the quantity of money in the country, compared with the quantity of commodities to be circulated, and the rapidity of circulation; and secondly, because, even granting that, as Adam Smith supposes, all prices would be lowered, profits would not be affected; for this very reason, because all prices would have fallen; in consequence of which every capitalist would be able to command, less money, it is true, but precisely the same quantity of all commodities which he desired to purchase, as before. The competition of capital, therefore, can, in no conceivable manner, operate to lower profits by lowering prices: and here Mr. Malthus is just as far from agreeing with Adam Smith as Mr. Ricardo himself. That there may be, and always is, a competition of capital for labour, is most true: this is the only competition of capital which Mr. Malthus acknowledges; and this competition has undoubtedly a tendency to raise wages, and, therefore, to lower profits; the limit to the rise of wages being the ratio between capital and population; wages, therefore, depend upon the ratio between population and capital, and profits depend upon wages: and this is the real doctrine of the “new school.” Where the Reviewer found the doctrine, that “the difficulty of production on the land is the regulator of profits,” he himself best knows.

The satire is here less refined than usual; for even had Mr. Malthus been capable of so grossly misunderstanding the doctrines of his opponents, he would scarcely, in that case, have been so simple as to expose his ignorance by quoting. Yet this the Reviewer has done (p. 320). “This principle” (that the difficulty of production on the land is the regulator of profits), “which is adverted to in various parts of the treatise” (meaning Mr. McCulloch’s Essay on Political Economy), “is broadly laid down in the last section of the third division, in the following passage.” A quotation follows; in which, after an attentive perusal, the passage most like the above proposition, which we can find, is the following:—

“The fall of profits, which invariably takes place as society advances and population becomes denser, is not owing to competition, but to a very different cause; to a diminution of the power to employ capital with advantage, resulting either from a decrease in the fertility of the soil which must be taken into cultivation in the progress of society, or from an increase of taxation.”^[*]

Here is a manifest insinuation, that Mr. Malthus is not only ignorant of the most elementary principles of the science, but that he is unable to understand a plain statement, conveyed in plain language. It is evident enough that Mr. McCulloch, in the above passage, not only did not assert that the difficulty of production on the land is the sole regulator of profits (if he had he would have been the first man who ever maintained so preposterous a doctrine), but never intended even to speak of any fluctuation in profits, excepting that fall “which invariably takes place as society advances, and population becomes denser;” that his meaning, in short, was, that whatever other causes might affect profits by affecting wages, there is one cause, namely, the increasing difficulty of producing the necessaries of the labourer, which must always ensure a rise of wages, and a consequent fall of profits, as population increases and cultivation is extended. Does the Reviewer deny this? Mr. Malthus surely does not.

We pass over all that the Reviewer says, to prove that corn wages are not the same at all times and in all places; never having heard of any body who asserted that they were, we think that he might have spared this portion of his labours. It is just as little to the purpose, that he triumphantly asks, how the fall of profits, which has taken place during the last eight or nine years, can be ascribed to the difficulty of production on the land; as if it had ever been asserted, that profits could never fall from any other cause. But mark how the Reviewer himself accounts for the fall of profits. “What, then,” says he, (p. 323) “was the cause of the fall of profits? It was obviously a fall in the value of produce!” and not only this, but “a fall in the value of produce, owing to the abundance and competition of capital!”

The reader probably thinks that we have said enough on the subject of the “value of produce;” but it is here that, for the first time, we get an incidental glimpse of what the phrase is intended to mean. This inveterate wag, who will never have done jeering Mr. Malthus, contrives once more to bring in our old acquaintance, the “measure of value.” By a fall, it seems, in the value of produce, he all along meant a fall in the exchangeable value of commodities, relatively to labour; in short, what any one else would have called a rise of wages: which is precisely the cause to which the “new school” ascribes the fall of profits. It is not to be supposed, however, that Mr. Malthus and the “new school” can be permitted to agree, on any one point. The sallies of our author’s wit here become particularly lively. Only mark the figure which Mr. Malthus is made to cut, by this pretended disciple. This abundance and competition of capital, says he (p. 323), lowers profits by occasioning a different division of what was produced, and awarding a larger proportion of it to the labourer, and a smaller to the capitalist. Yet, though the labourer obtains both a greater quantity of commodities, and a greater proportion, he does not obtain higher wages.

Nothing can be droller than the whole of this passage; nor any thing more sarcastically humourous than the appeal to “unsophisticated persons in business.” It only remains to intrust some competent person with the privilege of determining what “persons in business” are unsophisticated, and what the reverse; a privilege which he seems to think can be confided to no one, with so great propriety as to himself.

But this inveterate enemy of Mr. Malthus is not even yet satisfied; and having already made him, for the sake of his “measure of value,” explain away almost all the fundamental principles of the science, he next proceeds to make him explain away the principle of population itself. Mr. McCulloch had said, that an increase of capital, if unaccompanied by an increased difficulty of producing the necessaries of the labourer, is not likely to occasion a permanent fall of profits; because, by raising the wages of labour, it stimulates the increase of population, so as, in all probability, to lower wages, and raise profits to the same rate as before. This opinion the Reviewer now finds to be erroneous: an increase of capital, provided it comes upon a slack demand for produce (that is, an eagerness on the part of the labourers to toil; none to enjoy), does not stimulate population.^[*] True it is, that it gives more and better food, clothing, and lodging, more necessaries, comforts, and enjoyments, to every labourer; which we had hitherto believed to be the only way in which a rise of wages could possibly stimulate population; but the labourers, to whatever degree better fed, clothed, and lodged, will not multiply. For why? because there is a slack demand for produce, and because they have not got a greater value than before.

It would have been satisfactory had the Reviewer informed us in what manner, upon this principle, a rise of wages can by possibility take place at all. If wages cannot rise, unless the labourer gets a greater value for his labour, and if commodities can never have a greater value unless they can command more labour, the supposition of a rise of wages involves a contradiction; since, whatever quantity of food, clothing, and lodging a day’s labour may command, it can never command more than the value of a day’s labour. Although, however, it is not possible for wages to rise, it is possible for them to fall; and (what is somewhat remarkable), it is when the labourer obtains the greatest quantity of necessaries, comforts, and enjoyments, and the greatest proportion of the produce, that his wages are lowest. The supposed increase of capital, instead of increasing, as we should have expected, the demand for labour, actually diminishes it, “and the mass of these funds would not be adequate to set so many people to work as before” (p. 327). Now we have shewn that whatever is true of an increase of capital under the circumstances supposed, must necessarily be true of an increase of capital under any circumstances. If, therefore, capital continues to increase, and wages to rise, the demand for labour will continually diminish, and we may in time expect to see capital so plentiful and wages so high, that there will be no demand for labour at all! At the close of this lucid exposition, the Reviewer cracks a bitter joke upon Mr. Malthus. “The theory on the subject,” says he, “is very simple and clear.”^[*] The reader, perhaps, thinks that the Reviewer himself has afforded as striking a proof as could be desired of the clearness and simplicity of the subject; since, in spite of all his attempts to explain it, he has not succeeded in rendering it altogether unintelligible.

Although the three great fortresses of the “new school” are now utterly demolished, there remain, it would appear, certain outworks, from which it is still deemed necessary to dislodge them. One of these is the doctrine of the impossibility of a general glut. Having gone into this question at some length, in the article on War Expenditure in our third number,^[†] we shall not at present repeat the arguments which we then urged; but the contrary side of the question is here supported by an argument which, for its strictness and relevancy, is worthy of notice. Mr. McCulloch having said that for every excess in one commodity there must be a deficiency in another,^[‡] the Reviewer observes, that this strikes him as peculiarly illustrative of the impracticability and inapplicability of some of the doctrines of the new school.

The naïveté with which he thus proposes to rebut demonstration by testimony, is truly amusing. There is nothing, says Cicero, so absurd as not to have been maintained by some philosophers;^[§] and it may be said with equal truth, that in political economy there is no opinion, however absurd, whether on a question of fact or of principle, which may not easily be proved from “competent authority.” We are bold enough, however, in spite of “competent authority,” to think that every one desires to consume to the extent to which he produces. If he did not wish to consume either that which he produces or an equivalent, he would cease to produce. But the demand of the community is made up of the demands of individuals: and if every individual have a demand exactly equal to his supply, so also must the demand of the whole community be equal to its supply. To say that there can never be a greater sum total of commodities produced than the community wishes to consume, is merely to say in other words, that people will not consent to labour without a motive. The commodities, therefore, which are produced, cannot, collectively considered, be in excessive quantity, though they may be of the wrong kind. Too much may be produced of one commodity; because, though all want some commodity, all may not want that commodity. But as there cannot be an excess on the whole, if there be too much of one commodity, there must be too little of another. This reasoning is so clear and convincing, that the idea of disproving it by a reference to “competent authority” could have occurred to no one but a Reviewer, who wishes to aim a side blow at the cause which he professes to defend, and in behalf of which he insinuates (in this instance justly) that there was nothing better to be said.

There is an attempt to prove, in opposition to Mr. McCulloch, that labour, employed in agriculture, is more productive than labour employed in any other branch of industry;^[*] which, if it be meant as a joke, is so very dull a one, that if we could reconcile ourselves to a supposition which speaks so little for his intellect, we should be half inclined to suspect that the writer is in earnest. By wealth, we can understand nothing but necessaries, comforts, and enjoyments. How is it possible to say whether agriculture, or manufactures, be most productive of wealth? unless it is pretended to determine whether food or clothing be most essential to the happiness of man. But manufacturing capital, it seems, yields no more than the ordinary profits of stock; while agricultural capital yields not only profits but rent. True; but rent (if Mr. Malthus’s explanation of it be correct) is the effect, not of the greater fertility of the soil, but of the unequal fertility of different soils; not of the superior productiveness of agricultural, over every other capital, but of the unequal productiveness of one agricultural capital and another. So far is rent from being a proof of the superior productiveness of agriculture, that rent is highest when the productiveness of agricultural capital is the least; and when that productiveness is greatest, that is, when none but the best land is in cultivation, and when the return to capital from that land is at its highest, there is no rent at all. At that time, according to the Reviewer, the productiveness of agricultural and manufacturing capitals should be equal, and it is afterwards that they become unequal: but in what manner? Does agricultural industry become more productive, or manufacturing industry less productive? Quite the contrary. As cultivation advances, the capital first applied to the land does not become more productive than at first, while all capital subsequently applied is less so; nor is the productiveness of manufacturing capital diminished, but, on the contrary, it is probably increased by the invention of machinery and other expedients for abridging labour. If, then, at a time when there is no rent, agricultural capital, even that portion of it which yields the greatest return, is not more productive than capital employed in manufactures, it is difficult to see how the case should be altered by a mere change in the distribution; when the whole produce is no longer retained by the capitalist, but a part of it is given to the landlord.

We are aware, that, by arriving at this conclusion, we have laid ourselves open to the charge of “sweeping generalizations,” which our author deems “fatal to all clear explanation” (p. 306). However well-founded this censure may be, we think our remarks may bear, to say the least, a favourable comparison with his, in this respect; for, whatever may be our propensity to “sweeping generalizations,” we doubt whether we have produced any thing so “fatal to all clear explanation” as some of his paragraphs. We have already had occasion to remark on the peculiar taste which this gentleman seems to entertain for the incomprehensible; we might easily have adduced a greater number of specimens, but we have not room to transcribe the whole article into our pages. If, indeed, it be a merit to puzzle what is plain, to render intricate that which is simple, obscure that which is clear, and difficult that which is easy, it would be hard to find, in the whole circle of Political Economists, one with whose merits he might not vie.

But our readers have probably had enough of this merry writer; and so have we. We cannot, however, conclude, without expressing (together with our sincere gratitude for the amusement which he has afforded to us) our anxiety (which, we hope, he will not consider unpardonable) to know whether he excels as highly in the serious as he does in the jocular mood. We hope that his genius will not prove to be of that kind, which can shine only in a single department of the field of human attainments. Having shown, when he unbends himself, and condescends to be facetious at the expense of a brother economist, what a pitch of perfection he can attain; perhaps, when he next takes up the pen, to indite an article for the Quarterly Review, he may agreeably surprise us by writing common sense.

[[*] ]Malthus, Thomas Robert. “Political Economy,” Quarterly Review, XXX (1824), p. 305.

[* ]We cannot omit an opportunity of recording our feeble testimony to the merits of this essay, which deservedly ranks among the ablest productions of one of the first political economists of the age; and which, from the soundness of its principles, the aptness of its illustrations, and the perspicuity of its style, is one of the best elementary treatises of which the science has yet to boast. [McCulloch, John Ramsay. “Political Economy,” Supplement to the 4th, 5th, and 6th Editions of the Encyclopaedia Britannica. Edinburgh: Constable, 1824. Vol. VI, pp. 216-78.]

[[†] ]Malthus, “Political Economy,” p. 298.

[[*] ]Malthus, “Political Economy,” p. 331.

[[*] ]An Inquiry into the Nature and Causes of the Wealth of Nations. 2 vols. London: Strahan and Cadell, 1776.

[[†] ]Southey, Robert. “Inquiry into the Poor Laws, &c.,” Quarterly Review, VIII (Dec., 1812), p. 337.

[[‡] ]Southey, ibid., p. 337.

[* ]See a review of Colquhoun on the Poor, in the sixteenth number of the Quarterly Review. [Southey, “Inquiry into the Poor Laws, &c.,” pp. 320-7.]

[[*] ]Malthus, T. R. The Measure of Value Stated and Illustrated. London: Murray, 1823.

[[†] ]Principles of Political Economy Considered with a View to their Practical Application. London: Murray, 1820.

[[*] ]See, e.g., Measure of Value, pp. 4-5.

[* ]Principles of Political Economy [and Taxation], 3rd edition [London: Murray, 1821], p. 34.

[[*] ]Malthus, “Political Economy,” p. 310.

[[†] ]Ibid.

[* ]It is remarkable, that on this question of nomenclature, Mr. Ricardo actually agreed with Mr. Malthus: he did not indeed adopt the “measure of value,” but he believed that those modifications of the principle that value depends upon quantity of labour, on which Mr. Malthus lays so much stress, were not included in the proposition, but required to be annexed to it by a qualifying clause. Some other political economists, indeed, particularly Mr. McCulloch and Mr. Mill, think differently; and in their opinion we ourselves concur: not, however, to weary our readers by discussing a question of no practical use, we shall content ourselves with referring them to the latter part of the chapter on exchangeable value, in the second edition of Mr. Mill’s Elements [London: Baldwin, Cradock, and Joy, 1824, Chap. III, Section ii, pp. 94-9].

[[*] ]P. 307; cf. p. 29 above.

[[*] ]Malthus, “Political Economy,” pp. 314 ff.

[[*] ]Ibid., p. 315.

[[†] ]Ibid.

[[‡] ]Ibid.

[[§] ]Essay on the Principle of Population, as it Affects the Future Improvement of Society. London: Johnson, 1798.

[[*] ]Malthus, “Political Economy,” p. 316.

[[†] ]Ibid., pp. 318-19.

[[*] ]Ibid., p. 307.

[[†] ]Ibid., p. 308.

[[*] ]Malthus, “Political Economy,” p. 321; quoted from McCulloch, “Political Economy,” p. 269.

[[*] ]Malthus, “Political Economy,” p. 326.

[[*] ]Ibid., p. 327.

[[†] ]Mill, J. S. “War Expenditure,” Westminster Review, II (1824), 27-48. I.e., that printed above, pp. 3-22.

[[‡] ]Quoted by Malthus, “Political Economy,” p. 329, from McCulloch, “Political Economy,” p. 277.

[[§] ]De Divitione, 2.58.119.

[[*] ]Malthus, “Political Economy,” pp. 305-7.