Chapter IX: Part 9

There is however another point on which we differ; you say a striking approximation to this actually exists in the case of America; the only difference is that the demand for labour has awarded a larger quantity of corn to the labourer, the effect of which has been to keep the rate of profit comparatively low. But you surely do not mean that the exchangeable value of the commodities exported by America are (_sic_) in the least degree affected by the quantity of corn awarded to the labourer. I do not think you are justified in your expectation that in consequence of the accumulation of capital in America any commodity should fall there until it ceased to possess the character of a monopolized commodity. Corn and the bulky commodities of America (which latter are always regulated by the price of corn) could not fall until corn was sold at a price depending on the quantity of labour actually expended on its production, and not on the demand of our countries. When that time came, it would cease to be a monopolized commodity, and would fall as well as profits to the fair competition rates. I deny that America comes at all within your supposed case; and the proof is that, if you were to isolate America from all other countries, you would not lower her rate of profits, otherwise than by preventing her from receiving a supply of labour from other countries; but do the same thing to a country circumstanced as you have supposed, and profits would immediately fall from 100 to perhaps 20 per cent. Your case in fact is that of a country possessed of a particular commodity in very general demand, and on which competition operates most feebly. We have often discussed this peculiar case, and have always agreed in our opinions on it. I confess, however, I am astonished to hear you say that this is the case of America; you might with as much reason contend that it was also the case of Russia, of Poland, of the Cape of Good Hope, of Botany Bay. If indeed America could send her produce from the interior to Europe without expense, and if the ports of all countries were open freely to receive the corn with which America could, under the circumstances I have supposed, supply [them], then I should say the cases were similar; but, with the enormous expenses of sending corn from the interior of the country, America can really produce a very inconsiderable supply to Europe at an expense much less than Europe can grow it. You ask what can entitle me to suppose that corn will be at half the price in America that it is in other countries, and then argue on that supposition so contrary to the fact. I answer I did not apply my argument to America but to your case, which supposed a country to produce corn with half the labour which was required to produce it in other countries. If America can do this, then I apply it to America. You complain that I do not reason fairly with you, that my theory requires labour to be low in America; but you dispute my theory and refer to the actual state of things in America, where labour is high, and yet I contend that I have a right to suppose labour low. I was dealing with your case and not with America. With respect to America I am not in possession of the facts of her case, and I cannot admit that my theory requires the price of labour to be low in that country. It requires rent to be low, for without that there cannot be a great surplus produce to divide between the two other classes, after satisfying the landlord. You will always make me say that profits depend on the low price of corn. I never do say so; I contend that they depend on wages, and, although in my opinion wages will be mainly regulated by the facility of obtaining necessaries, they do not entirely depend on such facility. You wish to confine me to that theory, but I reject it; it is none of mine, and I have often told you so. I think I _do_ show that your fact does not invalidate my theory, which you say I am bound to do, and I do not assume a different fact than the one you refer to in order to refute you. Surely it is fair to say 'for such and such reasons your conclusion is not correct, but my argument would have been still stronger against you, if, as I have a right to suppose, labour in such a country were cheap, because the necessaries of the labourer are there obtained with facility.' In a country situated as you suppose America to be I do not see what is to make her corn rise; it is already according to your arguments at a monopoly price and cannot rise above that price unless there should be a greater demand and a higher price in Europe, which you say regulates the price in America, or unless America should become so populous that the price of her corn should be regulated by the expense of growing it, as in other countries, and that expense should exceed the present expense in Europe. If your theory be correct, this may not happen in 150 years, notwithstanding the greatest accumulation of capital; but will not labour fall during all that time? If it does fall, then the mean between corn and labour will fall. But suppose the other case. Suppose the _cost_ price of corn in America should rise above the present cost price in Europe; is it conceivable that labour should fall under such circumstances? To me it appears impossible unless we suppose money to alter in value. In this case then also the mean between corn and labour would vary in value. If hats were produced under the same circumstances as money they would not fall in price in consequence of a fall of profits. If hats were produced by the employment of capital, and money were produced, as you suppose, without any capital, then I allow and have said so in my book[253], hats would fall in price with a fall of profits. But I say again that too much importance is attached to money; facility of production is the great and interesting point. How does that operate on the interests of mankind? You ask what is to become of the money before produced in a country which should grow its own corn with 10 per cent. profit, if it had its facility of producing corn doubled, and profit, were to rise to 100 per cent.; you ask further whether she would not continue to produce money as well as other commodities as the profits of producing it would be also 100 per cent. If the facility of producing corn were doubled, a great deal of labour would be employed on other things, and therefore the corn and commodities of the country would altogether be of as great a money value as before, and would require the same quantity of money to circulate them. With respect to the production of more money that would depend on the demand for it and the prices of other things. I think the production of money would continue as before, but it is quite possible that there might be less encouragement to produce money than other things, and therefore capital might afford 100 per cent. profit in all employments except that one. I wonder you should refuse to assent to this obvious conclusion. You say it is your opinion that, if labour were to fall in consequence of improvements in agriculture before an increase of population had taken place, it could only be from glut and want of demand. Is this opinion consistent with another, which I think you hold, and in which I agree, that one of the regulators of the price of labour is the price of the necessaries of the labourer?

I have mentioned my suspicions respecting the writer of the article on population in the _Edinburgh Review_ to several persons. I will not utter them from this time. I hear nothing about Murray and Place. I hope your visit at Holland House was an agreeable one. Mrs. Ricardo unites with me in kind regards to Mrs. Malthus; we are all well and are leading gay lives, one week at Worcester Music meeting and Bromesberrow, another at Bath, etc.

Ever truly yours,
DAVID RICARDO.

NOTE.--Francis Place, the radical tailor, is well known to every
reader of Prof. Bain's Life of Mill (see e.g. p. 77). His book on
Population, perhaps the best of the long series that followed the
'Essay' of Malthus, was published by Longman early in 1822. He
differed from Malthus mainly on the nature of the preventive checks.
The collection of Scrap Books known by his name in the British
Museum library contains the following autograph letter of Malthus
(whom he seems to have first known through Ricardo):--'Mr. Malthus
sends to Mr. Place, at the request of Mr. Ricardo, the edition of
the Essay on Population which was first published in reply to the
speculations of Mr. Godwin and other writers. The copy sent is the
only one which Mr. Malthus has left. He will be much obliged to Mr.
Place, therefore, as soon as he has done with it, to send it to Mr.
Ricardo's house in Upper Brook St., to be kept till Mr. M. is in
town, which will be in a fortnight. Mr. Godwin, in his last work,
has proceeded to the discussion of the principles of population with
a degree of ignorance of his subject which is really quite
inconceivable.' E. I. Coll. Feb. 19, 1821.

LXXXI[254].

GATCOMB PARK, _27 Nov., 1821_.

MY DEAR MALTHUS,

Your excuse for not going on with the discussion which you commenced is ingenious, and I ought to be satisfied with it, as it is accompanied with a pretty compliment to me--indeed as pretty an one as could well be paid to a person who is so uniformly your adversary. I however agree with you;--we know each other's sentiments so well that we are not likely to do each other much good by private discussion. If I could manage my pen as well as you do yours, I think we might do some good to the public by a public discussion.

I am sorry that I shall be obliged to miss two of the Political Economy meetings[255], as I shall not be in London till towards the latter end of the month of January.

On the 7th of December I am to dine at Hereford, by invitation, with Hume, at a public dinner, which is to be given to him for the purpose of presenting him a silver tankard and a hogshead of cider, in token of the respect and gratitude of the inhabitants of Hereford for his public services. Hume comes from town on the occasion, and is to be met at Ross at 11 o'clock in the forenoon, and escorted with due honour into Hereford. I hope everything will be conducted in an orderly and peaceable manner. I have a great aversion to a row.

I have not yet seen Torrens' book[256], nor shall I see it in all probability till I get to London. Torrens has some concern in the Champion, in which there is a paper weekly on Political Economy[257]. I think these essays are well done, but you probably would not agree with me in that opinion.

Ever yours,
D. RICARDO.

NOTE.--This wide gap of more than a year between the eighty-first
and the eighty-second letter of this collection may be filled up by
a letter to Say (Oeuvres Diverses, p. 423), dated from London, 5th
March, 1822, and being a somewhat tardy answer to Say's letter of
July, 1821, quoted above, p. 182. He says in effect: We are nearer
agreement than I thought, and your distinction of natural and costly
utility illustrated by the iron and the gold is objectionable only
in point of expression. But it follows that commodities have a value
equal to the quantity of labour spent on them, and that therefore if
a pound of gold for example could be produced with less labour it
would fall in value. You for your part therefore are bound to
maintain it would be a less portion of our [social] wealth. Whereas
for my part I do not estimate wealth by value, but by utility from
whatever source derived. Your 'Catechisme' (of which Francis Place
has just given me the 2nd edition) says that a man's wealth is in
proportion to the value and not to the quantity of the things he
possesses, but, as you add that that same value is estimated by the
quantity of other things these same things will buy, wealth turns
out to be in proportion to quantity of goods after all. If wealth is
value, then to lessen all costs, so as to produce all things with
less labour, would be to make the wealth of the world no greater.
After some remarks on the 'two loaves,' he concludes by saying that
the Political Economy Club had made Say an honorary member. 'We hope
in time to raise ourselves from a Club to the dignity of an Academy,
and become a learned body with ever-increasing numbers.'

Say replies (1st May, 1822) that he gratefully accepts the honorary
membership. As to the points discussed, some of their differences
are merely verbal. His most important contention is that in
production we exchange productive services for products, and the
more products we obtain for them the more _value_ they have, and the
richer we are. 'Moreover, I do not think that we should aim at
giving abstract definitions especially of wealth,--definitions, that
is to say, in which we should abstract from the possessor and the
thing possessed. This was the method of medieval disputants, and
this was the very reason they could never come to an understanding.
Too general a definition, which enters into none of the
peculiarities of each several object, teaches us nothing.'

He concludes his letter by lamenting that his countrymen paid so
little attention to economical questions. A full half of his
audience in the Conservatoire des Arts et Metiers consisted of
foreigners--English, Russians, Poles, Germans, Spaniards,
Portuguese, and Greeks. The Crown Prince of Denmark got private
lessons from him.

LXXXII.

BROMESBERROW PLACE, LEDBURY, _Dec. 16, 1822_.

MY DEAR MALTHUS,

A long time has elapsed since there has been any connection between us, and I take an early opportunity after my arrival in England to address a few lines to you principally with a view of having some account of yourself and family, from your own pen. I have been actively employed since we last met, for not only have I wandered about Switzerland but I have been as far as Florence. In my way to Florence I deviated from the direct road to see Venice, and on my return from it I did the same thing in order to visit Genoa. Our journey has been an uncommonly prosperous one, for we have all enjoyed perfect health and have met with few or no difficulties. My companions as well as myself have very much enjoyed this tour. When I was at Geneva I saw a good deal of our friend Dumont, who accompanied us to Chamouny and returned with us to Geneva. At Coppet[258] I met M. Sismondi. He, the Duke of Broglie, and I had a long conversation on the points of difference between us: the Duke took my side, but after a long battle we each of us I believe remained in the same opinion that we commenced the discussion in. M. Sismondi has left a pleasing impression on my mind. Madame de Broglie had a great deal of patience and forbearance. She is, I think, a very agreeable lady. I stayed in Paris three weeks just previous to my return to England. M. de Broglie and the Baron de Stael arrived there after me. I had the pleasure of seeing them two or three times. I was very much pleased with M. Gallois[259], who made me acquainted with M. Destutt [de] Tracy[260], a very agreeable old gentleman, whose works I had read with pleasure. I do not entirely agree with him in his political economy; he is one of Say's school; there are, nevertheless, some points of difference between them. I saw Say several times, but our conversation did not turn much on subjects connected with political economy; he never led to those subjects, and I always fancied he did not much like to talk upon them. His brother, Louis Say[261], has published a thick volume of remarks upon Adam Smith's, his brother's, your, and my opinions. He is not satisfied with any of us. His principal object is to show that wealth consists in the abundance of enjoyable commodities; he accuses us all of wishing to keep up what we call valuable commodities, without any regard to quantity, about which only the political economist should be anxious. I do not believe that any of us will plead guilty to this charge. I feel fully assured that I do not merit it should be made against me.

M. Gamier[262] is dead; but previous to his death he had prepared an additional volume of notes for a new edition of his translation of the 'Wealth of Nations,' and which [_sic_] has lately been published. I had an opportunity of looking it over, and naturally turned to those places where he criticises me. He has bestowed a good deal of space on his remarks upon my work, but they do appear to me quite irrelevant. Neither he nor M. Say have (_sic_) succeeded in at all understanding what my opinions are. Your name often occurs in this last volume. I believe he differed from you also, but I had not time to read the whole of his book.

I hope you have been very industrious in my absence, and that we shall soon see the new edition of your last work[263]. I am anxious to know how you deal with the difficult question of value. I shall read you with great interest and attention.

I am sorry to find the agricultural distress continue. I was in hopes that it would have subsided before this time. I suppose we shall hear much on this subject next session of Parliament, and that I shall be a mark for all the country gentlemen. There is not an opinion I have given on the subject which I desire to recall. I only regret that my adversaries do not do me justice, and that they put sentiments in my mouth which I never uttered. Dr. Copplestone in his article in the Quarterly Review[264] charges me with maintaining the absurd doctrine that the price of gold bullion is a sure test of the value of bullion and currency. A Mr. Paget has addressed a (printed) letter[265] to me, in which I am accused of holding the same opinion, and everybody knows how pertinaciously Cobbet[t] persists in saying that I have always done so. I must fight my cause as well as I can; I know it is an honest one (in spite of Mr. Western's[266] insinuations), and, if it be also founded in truth and on correct views, justice will be finally done to me.

I arrived in London the beginning of last week; I saw Tooke for a few minutes, and was glad to hear from him that he had been writing and was nearly ready for the press. I have a very good opinion of his judgment and of the soundness of his views; he will, I think, from his practical knowledge, throw much light on the question of the influence of an over-supply or of an increased demand, without a corresponding supply, on price[267].

I am now on a visit to my son. On the 27th I shall go to Gatcomb for a week. From the 3rd to the 17th January I shall be with Mrs. Austin at Bradley, Wottonunderedge, and from the 17th to the 2nd February with Mrs. Clutterbuck, Widcomb, Bath. Where shall you pass your holidays? Is there any probability of my seeing you at Bath? I should be glad to meet you there.

I read in the papers with much concern of the renewal of disturbances amongst the young men at the college. I know how distressing to you such insubordination is, and greatly regretted that you should have been again exposed to it. I hope that order was quickly restored.

I saw Mr. Whishaw in London for a few minutes. I am not without hopes of seeing him at Mrs. Smith's at Easton Grey, where I mean to pass two nights on my way to Bradley....

Believe me,
Ever truly yours,
DAVID RICARDO.

LXXXIII.

LONDON, _29 April, 1823_.

MY DEAR MALTHUS,

After the most attentive consideration which I can give to your book[268], I cannot agree with you in considering labour, in the sense in which you use it, as a good measure of value. Neither can I discover exactly what connexion the constant labour necessary to produce the wages and profits on a commodity has with its value. If it be a good measure for one commodity, it must be for all commodities; and, as well as valuing wheat by the constant quantity of labour necessary to produce the particular quantity given to the workman, together with the profit of the farmer on that particular quantity, I might value cloth or any other thing by the same rule.

I know, indeed, that I might make out a table[269] precisely such as yours, in which the only alteration would be the word cloth instead of the word wheat, and you would probably then ask me whether your principle were not of universal application. I should answer that it contains in it that radical objection which you make against the proposed measure of your opponents. You may, if you please, arbitrarily select labour as a measure of value, and explain all the science of political economy by it, in the same way as any other man might select gold or any other commodity; but you can no more connect it with a principle or show its invariability than he could. Let me suppose that cloth could not be made in less than two years; the first line of my table must be altered, and the figures would stand in the following order:--

150, 100, 25 per cent. 7-1/2, 2-1/2, 10, 10, 15.

They would do so because ten pieces of cloth would, with the accumulation of profit for two years, be of the same value as a commodity, the result of the same quantity of labour, which could be produced in two years. I do not know how you will treat this objection, but in my opinion it is fatal to your whole theory.

I have the same objection to your measure, which I have always professed; you choose[270] a variable measure for an invariable standard. Who can say that a plague which should take off half our people would not alter the value of labour? We might, indeed, agree to transfer the variation to the commodities, and to say that they had fallen and not that labour had risen, but I can see no advantage in the change.

We might again discover modes by which the necessaries of the labourer might be produced with uncommon facility; and, in consequence of the stimulus which the good situation of the labourers might give to population, the reward of the labour in necessaries might be no higher than before; would it be right in this case, in which nothing had really altered but necessaries and labour, to say that they only had remained steadily at the same value, and, because a given quantity of corn or of labour will exchange only for (perhaps) 3/4 of the former quantity of linen, cloth, or money, to declare that it was the linen, cloth, or money which had risen in value, not labour and corn which had fallen?

Two countries are equally skilful and industrious; but in one the people live on the cheap food of potatoes, in the other on the dear food, wheat. You will allow that profits will be higher in the one country than the other. You will allow, too, that money may be nearly of the same value in both, if we choose anything else as a measure of value but labour. You will further agree that there might be an extensive trade between such countries. If a man sent a pipe of wine from the potato[271] country, which cost L100 and which might be sold at L110 in the wheat country, you would say that the wine was at a higher value in the country from which it was exported, merely because, in that country, it could command more labour. You would say this although the wine would not only exchange for more money but for more of every other commodity in the wheat country. I contend that this is a novelty which cannot be considered an improvement; it would confound all our usual notions, and would impose upon us the necessity of learning a new language. All mankind would say that wine was dearer in the wheat than in the potato country, and that labour was of less value in the latter. In page 31 there is a long passage on the reason for choosing labour as a standard, with which I am not satisfied. A piece of cloth is 120 yards in length and is to be divided between _A_ and _B_; it is obvious that in proportion as much is given to _A_ less will be given to _B_ and vice versa. This will be true, although the value of the whole 120 yards be L100, L50, or L5. Is it not then a begging of the question to assume the constant value because the quantity is constant, and because it is always to be divided between two persons?

Allowing you your premises, I see very few instances in which I can quarrel with your conclusions. I agree with all you say concerning the glut of commodities; allow to you your measure, and it is impossible to differ in the result.

I hope soon to see you. I have hardly been able to find time to write this letter, I am so busily engaged. I am serving on a committee.

Ever yours,
DAVID RICARDO.

NOTE.--The table referred to in this letter is the following:--

_Table illustrating the invariable Value of Labour and its Results._

Table Key
1: Quarters of corn produced by 10 men or varying fertility of
the soil.
2: Yearly corn wages to each labourer, determined by the demand
and supply.
3: Advances in corn wages, or variable produce commanding the
labour of 10 men.
4: Rate of profits under the foregoing circumstances.
5: Quantity of labour required to produce the wages of 10 men
under the foregoing circumstances.
6: Quantity of profits on the advances of labour.
7: Invariable value of the wages of a given number of men.
8: Value of 100 qrs. of corn under the circumstances supposed.
9: Value of the product of the labour of 10 men under the
circumstances supposed.

+-------------------------------------------------------------------+
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 |
|--------+-------+--------+-------+------+-----+----+-------+-------|
| | | | | | | | | |
|150 qrs.|12 qrs.|120 qrs.|25 p.c.|8 |2 | 10 | 8.33 | 12.5 |
|150 |13 |130 |15.38 |8.66 |1.34 | 10 | 7.7 | 11.53 |
|150 |10 |100 |50 |6.6 |3.4 | 10 | 10 | 15 |
|140 |12 |120 |16.66 |8.6 |1.4 | 10 | 7.14 | 11.6 |
|140 |11 |110 |27.2 |7.85 |2.15 | 10 | 9.09 | 12.7 |
|130 |12 |120 | 8.3 |9.23 |0.77 | 10 | 8.33 | 10.8 |
|130 |10 |100 |30 |7.7 |2.3 | 10 | 10 | 13 |
|120 |11 |110 | 9 |9.17 |0.83 | 10 | 9.09 | 10.9 |
|120 |10 |100 |20 |8.33 |1.67 | 10 | 10 | 12 |
|110 |10 |100 |10 |9.09 | .91 | 10 | 10 | 11 |
|110 | 9 | 90 |22.2 |8.18 |1.82 | 10 | 11.1 | 12.2 |
|100 | 9 | 90 |11.1 |9 |1 | 10 | 11.1 | 11.1 |
|100 | 8 | 80 |25 |8 |2 | 10 | 12.5 | 12.5 |
| 90 | 8 | 80 |12.5 |8.88 |1.12 | 10 | 12.5 | 11.25 |
+--------+-------+--------+-------+------+-----+----+-------+-------+

('Measure of Value,' p. 38.)

Columns 5 to 9 contain the debateable matter.

LXXXIV.

LONDON, _28 May, 1823_.

MY DEAR MALTHUS,

I will, to the best of my power, state my objections to your arguments respecting the measure of value. You have yourself stated, as an objection to my view on this subject, that a commodity produced with labour and capital united, cannot be a measure of value for any other commodities than such as are produced precisely under the same circumstances, and in this I have agreed that you are substantially correct. If all commodities were produced in one day and by labour only without the assistance of capital, they would vary in proportion as the quantity of labour employed on their production increased or diminished. If the same quantity of labour was constantly employed on the production of money, money would be an accurate measure of absolute value, and, if shrimps or nuts or any other thing rose or fell in such money, it would only be because more or less labour was employed in procuring them. Under such circumstances every commodity which was the produce of a day's labour would naturally command a day's labour, and therefore the value of a commodity would be in proportion to the quantity of labour which it would command. But, though such a money would measure accurately the value of every commodity produced under circumstances exactly similar, it would not be an accurate measure of the value of other commodities produced with a large quantity of capital, employed for a length of time. In the case just supposed a quantity of shrimps would be as accurate a measure of value as a quantity of money produced by the same quantity of labour; but, when capital is employed and cloth is the product of labour and capital, you justly say that cloth is not a correct measure of the value of shrimps and of silver, picked up by labour alone, on the sea shore; and yet with singular inconsistency, as I cannot help thinking, you contend that the shrimps and the silver, picked up by labour alone on the sea shore, are accurate measures of the value of cloth. If you are right, then must cloth be also an accurate measure of value, because the thing measured must be as good a measure as the thing with which you measure. When I say that L4 and a quarter of wheat are of the same value, I can measure other values by the quarter of wheat as well as by the L4. You say: 'It is conceded that, when labour alone is concerned in the production of commodities, and there is no question of time, both the absolute and exchangeable values of such commodities may be accurately measured by the quantity of labour employed upon them.' Nothing can, I think, be more correct, and it is perfectly accordant with what I have been saying. Your mistake appears to me to be this: you show us that under certain conditions a certain commodity would be a measure of absolute value, and then you apply it to cases where the conditions are not complied with, and suppose it to be a measure of absolute value in those cases also. You appear to me, too, to deceive yourself when you think you prove your proposition, because your proof only amounts to this, that your measure is a good measure of exchangeable value but not of absolute value. You say: 'If the accumulated and immediate labour worked up in a commodity be of any assumed value, L100 for instance, and the profits of the value of L20, including the compound profits upon the labour worked up in the materials, the whole will be of the value of L120. Of this value 1/6 only belongs to profits, the rest or 5/6 may be considered as the product of pure labour.' This is quite true, whether we value the commodity by the quantity of labour actually employed upon it, by the quantity which it will command when brought to market, or by the quantity of money, or any other commodity, for which it is exchanged; 5/6, in all cases, will belong to the workmen and 1/6 to the master. 'Consequently the value of 5/6 of the produce is determined by the quantity of labour employed on the whole; and the value of the whole produce by the quantity of labour employed upon it with the addition of 1/6 of that quantity.' This is really saying no more than that, when profits are one sixth of the value of the whole commodity (in which no rent enters), the other 5/6 go to reward the labourers, and that the portion so going to the labourers may itself be resolved into labour and profits in the same proportion of 5 and 1. Five men produce six pieces of cloth, of which 5 are paid to them, the men; if profits fall one half, the men will receive 5-1/2 pieces, and then you say the cloth is of less value; but in what medium? In labour, you answer. You appear to me to advance a proposition that cloth is of less value when it will exchange for less labour, and to prove it by showing the fact, merely, that it actually does exchange for less labour.

You say: 'But, when labour is concerned, it follows from what has been conceded that the value of the produce is determined by the quantity of labour employed upon it.' By value here you mean absolute value; and then you immediately apply this measure of absolute value, which is only conceded in a particular case, to a general proposition, and say 'consequently;' consequently on what? On this particular case; 'consequently the value of 5/6 of the produce is determined by the quantity of labour employed on the whole,' that is to say 'consequently the quantity of labour which 5/6 of the produce will command is determined by the quantity of labour employed on the whole;' the same is true, in the same sense, of 5/6, 5/7, 5/8, 5/9 or of any other proportions in which the whole may be divided. My only object has been to show, and, if I am not mistaken, I have succeeded in showing, that a measure of value, which is only allowed to be accurate in a particular case where no capital is employed, is arbitrarily applied by you to cases where capital and time necessarily enter into the consideration.

I fear I have been guilty of many repetitions. I shall not regret it, however, if I have made myself understood.

[The last sheet is wanting. The fragment on page 105 does not match this fragment.]

NOTE.--On 12th June, 1822, in one of Ricardo's most important
speeches on Resumption (afterwards published as a pamphlet), he
speaks of those who propose to make Corn, on a ten years' average,
the standard of value instead of money. To prove gold more variable
than corn, they and their authorities, Locke and Adam Smith are (he
says) obliged to begin by supposing gold invariable. 'Unless the
medium in which the price of corn is estimated could be asserted
to be invariable in its value, how could corn be said not to have
varied in relative value? If they must admit the medium to be
variable--and who could deny it?--then what became of the argument?'
Nothing is more difficult than to ascertain the variations in the
value of money: 'To do so with any accuracy we should have an
invariable measure of value; but such a measure we never had nor
ever can have.' (Cf. Pol. Econ. and Tax. ch. i. Sec. 7, Works, p. 28.)
But we can speak with accuracy of depreciation; we can see to it
that the standard is always the same standard, and that our currency
conforms to it, even if the standard itself may vary in value. (See
Note to Letter XXXI.)

LXXXV.

LONDON, _13 July, 1823_.

MY DEAR MALTHUS,

McCulloch and I did not settle the question of value before we parted,--it is too difficult a one to settle in a conversation; I heard everything he had to urge in favour of his view, and promised, during my holiday, to bestow a good deal of consideration on it. He means exactly what you say;--he does not contend that commodities exchange for each other according to the quantity of labour actually worked up in them, but he constitutes a commodity the general measure, by which he estimates the value of all others. A pipe of wine kept for three years has no more labour worked up in it than a pipe of wine kept for a day, but he says the additional value on account of time must be estimated by the accumulations which a like amount of capital actively employed in the support of labour would make in the same time. An oak-tree which has been growing for 200 years has very little labour actually worked up in it, but its value is to be estimated by the accumulated capital which the original labour employed would give in the same time. He and you in fact differ as to your original measure. I think he could not give any other good reason for choosing a medium which requires labour and capital to produce it, rather than one which requires labour only, excepting that commodities in general require the combination of the two, and that a measure, to have any claim to be even an approximation to an accurate one, should itself be produced under circumstances somewhat similar to the commodities which it is to measure. If all things required precisely the same quantities of capital and labour, and for the same length of time, to produce them, any one of them would be an accurate measure of the rest; but this is not the case; the conditions admit of infinite variety, and therefore whichever we choose it can only be an approximation to truth, and we are bound to give good reasons for preferring it.

I should, indeed, be wanting in candour if I refused to admit that my money measure would not measure the quantity of labour worked up in commodities. I have admitted it over and over again. I am also ready to admit that your money measure will measure exactly the quantity of labour and profits together of which commodities are composed, but so will my money measure. Neither of them will measure the quantity of labour alone worked up in commodities, but they will both measure the quantity of labour and profits together of which commodities are composed. Suppose gold always to require the same quantity of labour, for one year, before it can be brought to market, will you say that all variations in wages and profits may not be estimated in this medium? You would indeed say that many of those variations would be ascribable to the variations in the value of the medium, and not to any alteration in the value of the thing measured, because you do not think that it is any proof of invariability in a commodity that it requires always the same quantity of labour, and the same duration of time to produce it. If I allow the justice of your objection, I am at liberty to apply the same to your medium. The same quantity of labour applied for a day will always produce the same given quantity of gold; gold is therefore an invariable measure, you say. I find this gold vary in relation to another commodity which always requires the same quantity of labour and capital to produce it; you say it is never the gold but it is always the commodity which varies, and, when you are asked why, you answer because labour never varies. Double the quantity of labour in a country or diminish it one half, always leaving the funds which are to employ it at precisely the same amount, and you tell us, notwithstanding the condition of the labourer is in the one case a very distressed one, in the other a very prosperous one, that the value of his labour has not varied. I cannot subscribe to the justness of this language. The question is whether you are right, not whether I am wrong. Suppose that a man in India could pick up in a day precisely the same quantity of gold as in England, and that all trade in provisions were forbid between the two countries. The small quantity of rice and clothing in India which are necessary for the support of a labourer would be of precisely the same value as the quantity of wheat and clothing necessary for a labourer in England. But this would not long continue. All manufactured commodities would be of a high comparative money value in India, and consequently we should export manufactured commodities and import gold; the reward of a labourer in England would come to be a much larger quantity of gold than he could actually pick up here. No gold would be then obtained in England but by means of importation. Under these circumstances you would say that money was of a low value in England, and you would be correct if all men agreed to constitute labour the measure of value; but in this they do not agree, and, as we should find that at the very moment that gold was low, relatively to labour, in England, it was high relatively to manufactured commodities of every description, with which in fact gold would be purchased from India, if we took these commodities for the measure, we should be bound to say that gold was cheap in England and dear in India. You must remember that the point in dispute is whether labour be the correct measure of value; you must not then take the fact for granted, and then offer it as a proof of your correct conclusion.

We leave London for Gatcomb early to-morrow morning.... We shall have one bed disengaged if you and Mrs. Malthus will come over to us. I am sorry I cannot ask all your party.

Ever truly yours,
DAVID RICARDO.

LXXXVI[272]

[MINCHINHAMPTON, _Aug. 3, 1823_.]

MY DEAR MALTHUS,

The value of almost all commodities is made up of labour and profits, but in choosing a measure of value it is not necessary that it should possess the property of determining what proportion of the value of the commodity measured belongs to wages, and what proportion belongs to profits. You make it a reproach on my proposed measure that it will not do this, and prefer your own because it will. Now, as I do not think this quality essential to a measure of value, I shall not defend mine for not possessing this quality. This consideration appears to me wholly foreign to the question under discussion.

We agree, I believe, that nothing can be a measure of value which does not itself possess value. We agree too, I believe, that a measure of value to be a good one should itself be invariable, and further that in selecting one thing as a measure of value rather than another we are bound to show some good reason for such selection, for, if a good reason be not given, the choice is altogether arbitrary. Now the measure proposed by you has value, and therefore [is] not to be objected against on account of any deficiency of that quality; but I do not think it is invariable, and by the concession which you make in your last letter you appear to give up your measure, for you say that 'you expressed yourself without sufficient care, when you intimated that, if any number of labourers were imported or exported, the value of labour would remain the same.' This is a large concession indeed, and I think entirely subverts your measure, because, if it be true of labourers exported or imported, it must be true also of labourers born or dying in the country. If by poor laws imprudent marriages are encouraged and population becomes excessive, the effect on the value of labour will be precisely the same as if labourers had been imported; and, if an epidemic disorder break out and many labourers die, it will be the same as if they were exported. Nay more, if the people be well educated and be taught caution and foresight with regard to the increase of their numbers, who shall say that the effect on the value of labour will not be the same as an exportation of labourers? You have, I think, been imprudent, which is much at variance with your usual practice, in conceding this point, and you allow us to enter into your fortress and spike all your guns. You add indeed: 'This will only be true after the supply comes to be affected by the increased or diminished number of labourers.' When will the supply not be affected by the increased or diminished number? What follows will not assist you, for you say: 'If the corn obtained by twenty men be divided among ten, then the value of the wages of ten men will be less than the quantity of labour employed to produce them with the addition of profits, and vice versa.' What profits? They might have been 50 per cent., and may from the circumstance mentioned be reduced to 5 per cent. You speak of profits in this place as if they were a fixed amount, and forget that they fall when wages rise. Besides, I will not admit the extravagant supposition that the corn obtained by the labour of twenty men is bestowed as wages on ten men; but I will suppose that the corn obtained by twenty men had been sufficient to command the labour of thirty men, but that owing to a diminished supply of labour this same quantity of corn obtained by the same number of men is bestowed as wages on twenty-two men. In this case I ask you whether corn has fallen in value in the proportion of thirty to twenty-two? If you say Yes, then you do not admit that labour may rise in value in consequence of exporting labourers; and, if you say No, there is an end of your measure, because you then acknowledge that commodities do not vary according to the quantity of labour they can command. I do not see how you are to extricate yourself from this dilemma. I cannot discover what the value of the precious metals in different countries can have to do with this question. A piece of cloth or a piece of muslin can command more labour in India than in England; on this we are agreed, but we are not agreed in our explanation of this fact. You say the piece of cloth or muslin is more valuable in India than in England, and your proof is that it can command more labour in India. You would say so, although both cloth and muslin were exported from India to England, from the country where they are dear to the country where they are cheap. I, on the contrary, say that it is not the cloth and muslin which are dear in India and cheap in England, but it is labour which is cheap in India and dear in England, and that cloth and muslin would come to England from India although there were no such commodities as gold and silver on the face of the earth. I say further that you are bound to admit this by the concession which you have made, for you must admit that labour might be rendered cheap as effectually in England by prevailing on English labourers to be satisfied with the modest remuneration of food paid in India, as by the importation of labourers; and, if you do not admit it, I beg to ask why you refuse to do so. I beg you to point out the distinction between a supply of labourers from abroad, with a consequently reduced remuneration of food, and a supply of labourers from the principle of population, and a consequent reduction in the remuneration paid in food. Can you be said to have given a good reason for the selection which you have made of a measure of value when it will not bear close examination? You have repeatedly said that a commodity, on which a quantity of labour has been bestowed, will always exchange for a like quantity, together with an additional quantity which will constitute the profits on the advances. Now this I consider to be your main proposition, and on its truth must depend according to your own view the correctness of your measure. Is it true then that every commodity exchanges for two quantities of labour, one equal to the quantity actually worked up in it, another equal to the quantity which the profits will command? I say it is not. This year corn is cheap, and I must give a certain quantity of it to procure the labour of ten men to be worked up in the commodity which I manufacture; but next year, when I take my commodity to market, corn is dear and wages high, and therefore to procure a certain quantity of labour I must give more of my finished commodity than I should have given if corn had been plenty [_sic_] and wages low. If corn had been cheap and wages low, my profits would have been high; as it is, they are low. I want to know in these two cases whether the commodity does really exchange for the two specific quantities of labour mentioned above. You answer my question by saying that you always make a reserve of the first quantity, and all above it you call profits. But I contend that labour of one value has been expended on the commodity, and, when it comes to market, it is exchanged for labour of another value, and that is the sole reason why the balance, over and above the labour expended on it, is small. Why is it small but because the value of labour is high? No such thing, you say; labour never varies; and yet you cannot but confess that, if corn had been abundant and if wages had remained the same, the manufactured commodity would have exchanged for a great deal more labour. You say: 'How comes it about that labour should remain of the same value in the progress of society, when it is known that it must require more labour to produce it?' You must mean 'to produce the remuneration paid for it;' and you add: 'The answer to this question is that, as profits depend upon the _proportion_ of the whole produce which goes to labour, it must necessarily happen that the increase of value occasioned by the additional quantity of labour will be exactly counterbalanced by the diminution in the amount of profits, leaving the value of labour the same.' I confess I cannot understand this answer. We are inquiring about the meaning which should be attached to the words 'increase of value,' 'diminution of value.' You tell me that increase of value means an increased power of commanding labour. I deny that this definition is a correct one, because I deny the invariability of the standard measure you have chosen; and to prove its invariability you speak of the proportion in which the whole produce is divided, and that, if wages have more, profits have less;--all which is true, but what connection do you prove between this proposition and the invariability in your measure of value? In your answer you use the words 'increase of value;' that is to explain the meaning of the words required to be understood by the use of the words themselves. You mistake McCulloch's and my objection to your doctrine if you suppose it to be on account of its making the same quantity of labour of the same value, while the condition of the labourer is very different; we do not object to it on that account, because, as you justly observe, our own doctrines require the same admission; but we object to your saying that, from whatever cause it may arise that the labourer's condition is deteriorated, he is always receiving the same value as wages. When _our_ labourers are badly off, although (we say) they have wages of the same value, profits must necessarily be very low; according to you wages would be of the same value whether profits were 2 per cent. or 50 per cent.