Chapter V: Ricardo (2)

They were true enough to give the really conclusive answer to many popular fallacies. The type of sophistry which Ricardo specially assailed was that which results from neglecting the necessary implications of certain changes. The arguments for the old 'mercantile theory'--for 'protection' of industry, for the poor-law, for resisting the introduction of machinery, the fear of 'gluts' and all manner of doctrines about the currency--were really exposed by the economists upon the right grounds. It was absurd to suppose that by simply expanding the currency, or by making industry less efficient, or forcing it to the least profitable employments, you were increasing the national wealth; or to overlook the demoralising effects of a right to support because you resolved only to see the immediate benefits of charity to individuals. It is true, no doubt, that in some cases there might be other arguments, and that the economists were apt to take a narrow view of the facts. Yet they decisively exploded many bad arguments, and by the right method of enforcing the necessity of tracing out the whole series of results. It was partly to their success in confuting absurd doctrines that their confidence was due; though the confidence was excessive when it was transferred to the axioms from which they professed to start. A doctrine may be true enough to expose an error, and yet not capable of yielding definite and precise conclusions. If I know that nothing can come out of nothing, I am on the way to a great scientific principle and able to confute some palpable fallacies; but I am still a very long way from understanding the principle of the 'conservation of energy.' The truth that scarcity meant dearness was apparently well known to Joseph in Egypt, and applied very skilfully for his purpose. Economists have framed a 'theory of value' which explains more precisely the way in which this is brought about. A clear statement may be valuable to psychologists; but for most purposes of political economy Joseph's knowledge is quite sufficient. It is the doctrine which is really used in practice whatever may be its ultimate justification.

The postulates, however, were taken by the economists to represent something more than approximate statements of the fact. They imply certain propositions which might be regarded as axioms. Men desire wealth and prefer their own interests. The whole theory might then be regarded as a direct deduction from the axioms. It thus seemed to have a kind of mathematical certainty. When facts failed to conform to the theory the difficulty could be met by speaking, as Malthus spoke, of 'tendencies,' or by appealing to the analogy of 'friction' in mechanics. The excuse might be perfectly valid in some cases, but it often sanctioned a serious error. It was assumed that the formula was still absolutely true of something, and that the check or friction was a really separable and accidental interference. Thus it became easy to discard, as irrelevant, objections which really applied to the principle itself, and to exaggerate the conformity between fact and theory. The economic categories are supposed to state the essential facts, and the qualifications necessary to make them accurate were apt to slip out of sight. Ricardo,[338] to mention a familiar instance, carefully points out that the 'economic rent,' which clearly represents an important economic category, is not to be confounded, as in 'popular' use, with the payments actually made, which often include much that is really profit. The distinction, however, was constantly forgotten, and the abstract formula summarily applied to the concrete fact.

The economists had constructed a kind of automaton which fairly represented the actual working of the machinery. But then, each element of their construction came to represent a particular formula, and to represent nothing else. The landlord is simply the receiver of surplus value; the capitalist the one man who saves, and who saves in proportion to profit; and the labourer simply the embodiment of Malthus's multiplying tendency. Then the postulates as to the ebb and flow of capital and labour are supposed to work automatically and instantaneously. Ricardo argues that a tax upon wages will fall, not, as Buchanan thought, upon the labourer, nor, as Adam Smith thought, upon rent, but upon profits; and his reason is apparently that if wages were 'lowered the requisite population would not be kept up.'[339] The labourer is able to multiply or diminish so rapidly that he always conforms at once to the required standard. This would seem to neglect the consideration that, after all, some time is required to alter the numbers of a population, and that other changes of a totally different character may be meanwhile set up by rises and falls of wages. Ricardo, as his letters show,[340] was well aware of the necessity of making allowance for such considerations in applying his theorems. He simplified the exposition by laying them down too absolutely; and the doctrine, taken without qualification, gives the 'economic man,' who must be postulated to make the doctrine work smoothly. The labourer is a kind of constant unit--absolutely fixed in his efficiency, his wants, and so forth; and the same at one period as at another, except so far as he may become more prudent, and therefore fix his 'natural price' a little higher. An 'iron law' must follow when you have invented an iron unit. In short, when society is represented by this hypothetical mechanism, where each man is an embodiment of the required formula, the theory becomes imperfect so far as society is made up of living beings, varying, though gradually, in their whole character and attributes, and forming part of an organised society incomparably too complex in its structure to be adequately represented by the three distinct classes, each of which is merely a formula embodied in an individual man. The general rules may be very nearly true in a great many cases, especially on the stock-exchange; but before applying them to give either a history or a true account of the actual working of concrete institutions, a much closer approximation must be made to the actual data.

I need not enlarge, however, upon a topic which has been so often expounded. I think that at present the tendency is rather to do injustice to the common-sense embodied in this system, to the soundness of its aims, and to its value in many practical and immediate questions, than to overestimate its claim to scientific accuracy. That claim may be said to have become obsolete.

One point, however, remains. The holders of such a doctrine must, it is said, have been without the bowels of compassion. Ricardo, as critics observe with undeniable truth, was a Jew and a member of the stock-exchange. Now Jews, in spite of Shylock's assertions, and certainly Jewish stockbrokers, are naturally without human feeling. If you prick them, they only bleed banknotes. They are fitted to be capitalists, who think of wages as an item in an account, and of the labourer as part of the tools used in business. Ricardo, however, was not a mere money-dealer, nor even a walking treatise. He was a kindly, liberal man, desirous to be, as he no doubt believed himself to be, in sympathy with the leaders of political and scientific thought, and fully sharing their aspirations. No doubt he, like his friends, was more conspicuous for coolness of head than for impulsive philanthropy. Like them, he was on his guard against 'sentimentalism' and 'vague generalities,' and thought that a hasty benevolence was apt to aggravate the evils which it attacked. The Utilitarians naturally translated all aspirations into logical dogmas; but some people who despised them as hard-hearted really took much less pains to give effect to their own benevolent impulses. Now Ricardo, in this matter, was at one with James Mill and Bentham, and especially Malthus.[341] The essential doctrine of Malthus was that the poor could be made less poor by an improved standard of prudence. In writing to Malthus, Ricardo incidentally remarks upon the possibility of raising the condition of the poor by 'good education' and the inculcation of foresight in the great matter of marriage.[342] Incidental references in the _Principles_ are in the same strain. He accepts Malthus's view of the poor-laws, and hopes that, by encouraging foresight, we may by degrees approach 'a sounder and more healthful state.'[343] He repudiates emphatically a suggestion of Say that one of his arguments implies 'indifference to the happiness' of the masses,[344] and holds that 'the friends of humanity' should encourage the poor to raise their standard of comfort and enjoyment. The labourers, as he elsewhere incidentally observes, are 'by far the most important class in society.'[345] How should they not be if the greatest happiness of the greatest number be the legitimate aim of all legislation?

It is true that in his argument Ricardo constantly assumes that his 'natural price' will also be the real price of labour. The assumption that the labourers' wages tend to a minimum is a base for his general arguments. The inconsistency, if there be one, is easily intelligible. Ricardo agreed with Malthus that, though the standard might be raised, and though a rise was the only way to improvement, the chances of such a rise were not encouraging. Improved wages, as he says,[346] might enable the labourer to live more comfortably if only he would not multiply. But 'so great are the delights of domestic society, that in practice it is invariably found that an increase of population follows an amended condition of the labourer,' and thus the advantage is lost as soon as gained.

I have tried to show what was the logical convenience of the assumption. Ricardo, who has always to state an argument at the cost of an intellectual contortion, is content to lay down a rule without introducing troublesome qualifications and reserves. Yet he probably held that his postulate was a close approximation to the facts. Looking at the actual state of things at the worst time of the poor-law, and seeing how small were the prospects of stirring the languid mind of the pauper to greater forethought, he thought that he might assume the constancy of an element which varied so slowly. The indifference of the Ricardo school generally to historical inquiry had led them no doubt to assume such constancy too easily. Malthus, who had more leaning to history, had himself called attention to many cases in which the 'prudential check' operated more strongly than it did among the English poor. Probably Ricardo was in this, as in other cases, too hasty in assuming facts convenient for his argument. The poor man's character can, it is clear, be only known empirically; and, in fact, Ricardo simply appeals to experience. He thinks that, as a fact, men always do multiply in excess. But he does not deny that better education might change their character in this respect. Indeed, as I have said, an even excessive faith in the possible modification of character by education was one of the Utilitarian tenets. If Ricardo had said broadly that a necessary condition of the improvement of the poor was a change of the average character, I think that he would have been saying what was perfectly true and very much to the purpose both then and now. The objection to his version of a most salutary doctrine is that it is stated in too narrow terms. The ultimate unit, the human being, is indeed supposed to be capable of great modification, but it is solely through increasing his foresight as to the effects of multiplication that the change is supposed to be attainable. The moral thus drawn implied a very limited view of the true nature and influence of great social processes, and in practice came too often to limiting possible improvement to the one condition of letting things alone. Let a man starve if he will not work, and he will work. That, as a sole remedy, may be insufficient; though, even in that shape, it is a doctrine more likely to be overlooked than overvalued. And meanwhile the acquiescence in the painful doctrine that, as a matter of fact, labourers would always multiply to starvation point, was calculated to produce revolt against the whole system. Macaulay's doctrine that the Utilitarians had made political economy unpopular was so far true that the average person resented the unpleasant doctrines thus obtruded upon him in their most unpleasant shape; and, if he was told that they were embodied logic, revolted against logic itself.

V. THE RICARDIANS

It will be quite sufficient to speak briefly of the minor prophets who expounded the classical doctrine; sometimes falling into fallacies, against which Ricardo's logical instinct had warned him; and sometimes perhaps unconsciously revealing errors which really lurked in his premises. When Ricardo died, James Mill told M'Culloch that they were 'the two and only genuine disciples' of their common friend.[347] Mill wrote what he intended for a Schoolbook of Political Economy.[348] Brief, pithy, and vigorous, it purports to give the essential principles in their logical order; but, as his son remarks,[349] had only a passing importance. M'Culloch took a more important place by his writings in the _Edinburgh Review_ and elsewhere, and by his lectures at Edinburgh and at London. He was one of the first professors of the new university. His _Principles of Political Economy_[350] became a text-book, to be finally superseded by John Stuart Mill. Other works statistical and bibliographical showed great industry, and have still their value. He was so much the typical economist of the day that he has been identified with Carlyle's _M'Crowdy_, the apostle of the dismal science.[351] He writes, however, with enough vivacity and fervour of belief in his creed to redeem him from the charge of absolute dulness. An abler thinker was Colonel (Robert) Torrens (1780-1864).[352] He had served with distinction in the war; but retired on half-pay, and was drawn by some natural idiosyncrasy into the dry paths of economic discussion. He was already confuting the French economists in 1808; and was writing upon the Bank-charter Act and the Ten Hours' Bill in 1844. Torrens held himself, apparently with justice, to be rather an independent ally than a disciple of Ricardo. His chief works were an essay upon the 'External Corn-trade' (1815)[353] and an 'Essay on the Production of Wealth' (1821). Ricardo pronounced his arguments upon the Corn-trade to be 'unanswered and unanswerable,'[354] and he himself claimed to be an independent discoverer of the true theory of rent.[355] He was certainly a man of considerable acuteness and originality. In these writings we find the most sanguine expressions of the belief that political economy was not only a potential, but on the verge of becoming an actual, science. Torrens observes that all sciences have to pass through a period of controversy; but thinks that economists are emerging from this stage, and rapidly approaching unanimity. In twenty years, says this hopeful prophet, there will scarcely exist a 'doubt of its' (Political Economy's) 'fundamental principles.'[356] Torrens thinks that Ricardo has generalised too much, and Malthus too little; but proposes, with proper professions of modesty, to take the true _via media_, and weld the sound principles into a harmonious whole by a due combination of observation and theory. The science, he thinks, is 'analogous to the mixed mathematics.'[357] As from the laws of motion we can deduce the theory of dynamics, so from certain simple axioms about human nature we can deduce the science of Political Economy. M'Culloch, at starting, insists in edifying terms upon the necessity of a careful and comprehensive induction, and of the study of industrial phenomena in different times and places, and under varying institutions.[358] This, however, does not prevent him from adopting the same methods of reasoning. 'Induction' soon does its office, and supplies a few simple principles, from which we may make a leap to our conclusions by a rapid, deductive process.

The problems appear to be too simple to require long preliminary investigations of fact. Torrens speaks of proving by 'strictly demonstrative evidence' or of 'proceeding to demonstrate' by strict analysis.[359] This is generally the preface to one of those characteristic arithmetical illustrations to which Ricardo's practice gave a sanction. We are always starting an imaginary capitalist with so many quarters of corn and suits of clothes, which he can transmute into any kind of product, and taking for granted that he represents a typical case. This gives a certain mathematical air to the reasoning, and too often hides from the reasoner that he may be begging the question in more ways than one by the arrangement of his imaginary case. One of the offenders in this kind was Nassau Senior (1790-1864), a man of remarkable good sense, and fully aware of the necessity of caution in applying his theories to facts. He was the first professor of Political Economy at Oxford (1825-1830), and his treatise[360] lays down the general assumption of his orthodox contemporaries clearly and briefly. The science, he tells us, is deducible from four elementary propositions: the first of which asserts that every 'man desires to obtain additional wealth with as little sacrifice as possible'; while the others state the first principles embodied in Malthus's theory of population, and in the laws corresponding to the increasing facility of manufacturing and the decreasing facility of agricultural industry.[361] As these propositions include no reference to the particular institutions or historical development of the social structure, they virtually imply that a science might be constructed equally applicable in all times and places; and that, having obtained them, we need not trouble ourselves any further with inductions. Hence it follows that we can at once get from the abstract 'man' to the industrial order. We may, it would seem, abstract from history in general. This corresponds to the postulate explicitly stated by M'Culloch. 'A state,' he tells us, 'is nothing more than an aggregate of individuals': men, that is, who 'inhabit a certain tract of country.'[362] He infers that 'whatever is most advantageous to them' (the individuals) 'is most advantageous to the state.' Self-interest, therefore, the individual's desire of adding to his 'fortune,' is the mainspring or _causa causans_ of all improvement.[363] This is, of course, part of the familiar system, which applies equally in ethics and politics. M'Culloch is simply generalising Adam Smith's congenial doctrine that statesmen are guilty of absurd presumption when they try to interfere with a man's management of his own property.[364] This theory, again, is expressed by the familiar maxim _pas trop gouverner_, which is common to the whole school, and often accepted explicitly.[365]

It will be quite enough to notice one or two characteristic results. The most important concern the relation between the labourer and the capitalist. Malthus gives the starting-point. Torrens, for example, says that the 'real wages of labour have a constant tendency to settle down' to the amount rendered necessary by 'custom and climate' in order to keep up his numbers.[366] Mill observes in his terse way that the capitalist in the present state of society 'is as much the owner of the labour' as the manufacturer who operates with slaves. The only 'difference is in the mode of purchasing.'[367] One buys a man's whole labour; the other his labour for a day. The rate of wages can therefore be raised, like the price of slaves, only by limiting the supply. Hence the 'grand practical problem is to find the means of limiting the number of births.'[368] M'Culloch is equally clear, and infers that every scheme 'not bottomed on' the principle of proportioning labour to capital must be 'completely nugatory and ineffectual.'[369]

The doctrine common to the whole school led M'Culloch to conclusions which became afterwards notorious enough to require a word of notice. Torrens, like Ricardo, speaks of capital as 'accumulated labour,' but makes a great point of observing that, although this is true, the case is radically changed in a developed state of society. The value of things no longer depends upon the labour, but upon the amount of capital employed in their production.[370] This, indeed, may seem to be the most natural way of stating the accepted principle. M'Culloch replies that the change makes no difference in the principle,[371] inasmuch as capital being 'accumulated labour,' value is still proportioned to labour, though in a transubstantiated shape. M'Culloch supposed that by carrying out this principle systematically he was simplifying Ricardo and bringing the whole science into unity. All questions, whether of value in exchange, or of the rate of wages, can then be reduced to comparing the simple unit called labour. Both Mill and M'Culloch regard capital as a kind of labour, so that things may be produced by capital alone, 'without the co-operation of any immediate labour'[372]--a result which can hardly be realised with the discovery of a perpetual motion. So, again, the value of a joint product is the 'sum' of these two values.[373] All value, therefore, can be regarded as proportioned to labour in one of its two states. M'Culloch advanced to an unfortunate conclusion, which excited some ridicule. Though Ricardo and Torrens[374] rejected it, it was accepted by Mill in his second edition.[375] Wine kept in a cask might increase in value. Could that value be ascribed to 'additional labour actually laid out'? M'Culloch gallantly asserted that it could, though 'labour' certainly has to be interpreted in a non-natural sense.[376] Not only is capital labour, but fermentation is labour, or how can we say that all value is proportioned to labour? This is only worth notice as a pathetic illustration of the misfortunes of a theorist ridden by a dogma of his own creation. Another conclusion is more important. The 'real value' of anything is measured by the labour required to produce it. Nothing 'again is more obvious' than that equal labour implies the 'same sacrifice' in all states of society.[377] It might seem to follow that the value of anything was measured by the labour which it would command. This doctrine, however, though maintained by Malthus, was, according to M'Culloch, a pestilent heresy, first exploded by Ricardo's sagacity.[378] Things exchange, as he explains, in proportion to the labour which produces them, but the share given to the labourer may vary widely. The labourer, he says, 'gives a constant, but receives a variable quantity in its stead.' He makes the same sacrifice when he works for a day, but may get for it what he produces in ten hours, or only in one. In every case, however, he gets less than he produces, for the excess 'constitutes profits.'[379] The capitalist must get his interest, that is, the wages of the accumulated labour. Here we come again to the Socialist position, only that the Socialist infers that the labourer is always cheated by the capitalist, and does not consider that the machine can ask for 'wages' on the pretext that it is accumulated labour. What, however, determines the share actually received? After all, as a machine is not actually a labourer, and its work not a separable product, we cannot easily see how much wages it is entitled to receive. M'Culloch follows the accepted argument. 'No proposition,' he says, 'can be better established than that the market rate of wages ... is exclusively determined by the proportion between capital and population.'[380] We have ultimately here, as elsewhere, 'the grand principle to which we must always come at last,' namely, 'the cost of production.'[381] Wages must correspond to the cost of raising the labourer. This leads to a formula, which afterwards became famous. In a pamphlet[382] devoted to the question, he repeats the statement that wages depend upon the proportion between population and capital; and then, as if the phrase were identical, substitutes that portion of capital which is required for the labourer's consumption. This is generally cited as the first statement of the 'wage-fund' theory, to which I shall have to return.

I need not pursue these illustrations of the awkward results of excessive zeal in a disciple. It is worth noticing, however, that M'Culloch's practical conclusions are not so rigid as might be inferred. His abstract doctrines do not give his true theory, so much as what he erroneously took to be his theory. The rules with which he works are approximately true under certain conditions, and he unconsciously assumes the conditions to be negligible, and the rules therefore absolute. It must be added that he does not apply his conclusions so rigidly as might be expected. By the help of 'friction,' or the admission that the ride is only true in nineteen cases out of twenty, he can make allowance for many deviations from rigid orthodoxy. He holds, for example, that government interference is often necessary. He wishes in particular for the establishment of a 'good system of public education.'[383] He seems to have become more sentimental in later years. In the edition of 1843 he approves the Factory Acts, remarking that the last then passed 'may not, in some respects, have gone far enough.'[384] He approves a provision for the 'impotent poor,' on the principle of the Elizabethan act, though he disapproves the centralising tendency of the new poor-law. Though he is a good Malthusian,[385] and holds the instinct of population to be a 'constant quantity,'[386] he does not believe in the impossibility of improvement. The 'necessary' rate of wages fixes only a minimum: an increase of population has been accompanied by an increase of comfort.[387] Wages rise if the standard of life be raised, and a rise of wages tends to raise the standard. He cordially denounces the benevolent persons who held that better wages only meant more dissipation. Better wages are really the great spur to industry and improvement.[388] Extreme poverty causes apathy; and the worst of evils is the sluggishness which induces men to submit to reductions of wages. A sense of comfort will raise foresight; and the _vis medicatrix_ should be allowed to act upon every rank of society. He is no doubt an individualist, as looking to the removal of restrictions, such as the Conspiracy Laws,[389] rather than to a positive action of the government; but it is worth notice that this typical economist is far from accepting some of the doctrines attributed to the school in general.

The classical school blundered when it supposed that the rules which it formulated could be made absolute. To give them that character, it was necessary to make false assumptions as to the ultimate constitution of society; and the fallacy became clear when the formulae were supposed to give a real history or to give first principles, from which all industrial relations could be deduced. Meanwhile, the formulae, as they really expressed conditional truths, might be very useful so long as, in point of fact, the conditions existed, and were very effective in disposing of many fallacies. The best illustration would probably be given by the writings of Thomas Tooke (1774-1858),[390] one of the founders of the Political Economy Club. The _History of Prices_ is an admirable explanation of phenomena which had given rise to the wildest theories. The many oscillations of trade and finance during the great struggle, the distress which had followed the peace, had bewildered hasty reasoners. Some people, of course, found consolation in attributing everything to the mysterious action of the currency; others declared that the war-expenditure had supplied manufacturers and agriculturists with a demand for their wares, apparently not the less advantageous because the payment came out of their own pockets.[391] Tooke very patiently and thoroughly explodes these explanations, and traces the fluctuations of price to such causes as the effect of the seasons and the varying events of the war which opened or closed the channels of commerce. The explanation in general seems to be thoroughly sound and conclusive, and falls in, as far as it goes, with the principles of his allies. He shows, for example, very clearly what were the conditions under which the orthodox theory of rent was really applicable; how bad seasons brought gain instead of loss to the 'agricultural interest,' that is, as Tooke explains, to the landlord and farmer; how by a rise of price out of proportion to the diminution of supply, the farmer made large profits; how rents rose, enclosure bills increased, and inferior land was brought under the plough. The landlord's interest was for the time clearly opposed to that of all other classes, however inadequate the doctrine might become when made absolute by a hasty generalisation. I need not dwell upon the free-trade argument which made the popular reputation of the economists. It is enough to note briefly that the error as to the sphere of applicability of the doctrine did not prevent many of the practical conclusions from being of the highest value.

FOOTNOTES:

[294] A life of Ricardo by M'Culloch is prefixed to his _Works_. I cite the edition of 1880. Ricardo's letters to Malthus were published by Mr. Bonar in 1887; his letters to M'Culloch, edited by Mr. Hollander for the American Economic Association, in 1895; and his letters to H. Trower, edited by Mr. Bonar and Mr. Hollander, have just appeared (1900).

[295] He remarks upon this difficulty in the case of Smith's treatment of rent, and gives a definition to which he scarcely adheres.--_Works_, p. 34 ('Principles,' ch. ii., 1888).

[296] _Works_, p. 378. Ricardo, it should be said, complained when Malthus interpreted him to mean that this opposition of interests was permanent and absolute.

[297] Malthus admits the general principle of free trade, but supports some degree of protection to corn, mainly upon political grounds. He holds, however, with Adam Smith, that 'no equal quantity of productive labour employed in manufactures could ever occasion so great a reproduction as in agriculture' (_Grounds of an Opinion, etc._, p. 35)--a relic of the 'physiocrat' doctrine.

[298] _Works_, p. 385.

[299] _Ibid._ p. 386.

[300] See also _Letters to Malthus_, p. 175.

[301] 'Your modern political economists say that it is a principle in their science that all things find their level; which I deny, and say, on the contrary, that it is the true principle that all things are finding their level, like water in a storm.'--Coleridge's _Table-Talk_, 17th May 1833.

[302] _Letters to Malthus_, p. 96; and see the frequently quoted passage where he complains that Malthus has taken his book as more 'practical' than he had intended it to be, and speaks of his method of imagining 'strong cases.'--_Ibid._ p. 167.

[303] _Works_, p. 40 _n._ (ch. ii.).

[304] _Works_, p. 53 (ch. v.), and p. 124 (ch. xvi.), where he quotes from the _Wealth of Nations_ (M'Culloch), p. 390 (bk. v. ch. ii. art. 3).

[305] _Works_, p. 131.

[306] _Wealth of Nations_ (M'Culloch), p. 31 (bk. i. ch. viii.).

[307] _Works_, p. 41 (ch. ii.).

[308] _Wealth of Nations_ (M'Culloch), p. 36.

[309] _Works_, p. 51 (ch. v.).

[310] _Letters to Malthus_, p. 98.

[311] _Works_, p. 239 (ch. xxxi., added in third edition, 1821).

[312] _Ibid._ p. 50 (ch. v.).

[313] _Ibid._ p. 52.

[314] _Ibid._ p. 15 (ch. i. sec. ii.).

[315] There is, indeed, a difficulty which I happily need not discuss. Undoubtedly the doctrine of gluts was absurd. There is, of course, no limit to the amount of wealth which can be used or exchanged. But there certainly seems to be a great difficulty in effecting such a readjustment of the industrial system as is implied in increased production of wealth; and the disposition to save may at a given time be greater than the power of finding profitable channels for employing wealth. This involves economical questions beyond my ability to answer, and happily not here relevant.

[316] _Letters to Malthus_, p. 101.

[317] _Ibid._ p. 52.

[318] _Works_, p. 174 (ch. xxi.).

[319] _Works_, p. 66 (ch. vi.).

[320] _Works_, p. 240 (ch. xxxi.).

[321] Ricardo, _Works_, p. xxiv.

[322] Menger's _Das Recht auf den vollen Arbeitsertrag_ (1891), p. 38.

[323] _Works_, p. 228 (ch. xxviii.).

[324] _Works_, pp. 29, 60.

[325] _Ibid._ p. 166.

[326] _Works_, p. 170 (ch. xx.).

[327] _Ibid._ p. 7.

[328] So he tells Malthus (_Letters_, pp. 173, 174) that the buyer has 'the least to do in the world' with the regulation of prices. It is all the competition of the sellers. 'Demand' influences price for the moment, but 'supply follows close upon its heels, and takes up the regulation of price.'

[329] _Works_, p. 234.

[330] Bentham's _Works_, x. 498.

[331] _Works_, p. 250 (ch. xxxii.).

[332] Stewart's _Works_, x. 34.

[333] See Bagehot's remarks upon J. S. Mill's version of this doctrine in _Economic Studies_: chapter on 'Cost of Production.'

[334] Another illustration of the need of such considerations is given, as has been pointed out, in Adam Smith's famous chapter upon the variation in the rate of wages. He assumes that the highest wages will be paid for the least agreeable employments, whereas, in fact, the least agreeable are generally the worst paid. His doctrine, that is, is only true upon a tacit assumption as to the character and position of the labourer, which must be revised before the rule can be applied.

[335] J. S. Mill, too, in his _Political Economy_ makes the foundation of private property 'the right of producers to what they themselves have produced.' (Bk. ii. ch. ii. Sec. 1.)

[336] Mr. Edwin Cannan, in _Production and Distribution_ (1894), p. 383.

[337] A definition, says Burke in his essay on the 'Sublime and Beautiful' (introduction) 'seems rather to follow than to precede our inquiry, of which it ought to be considered as the result.'

[338] _Works_, p. 34 (chap. ii.). Rent is there defined as the sum paid for the original and indestructible powers of the soil.

[339] _Works_, p. 132 (chap. xvii.). He admits (_Ibid._ p. 210 _n._) that the labourer may have a little more than what is absolutely necessary, and that his inference is therefore 'expressed too strongly.'

[340] See _Letters to M'Culloch_, p. xxi.

[341] 'The assaults upon Malthus's "great work,"' he says (_Works_, p. 243, ch. xxxii.), 'have only served to prove its strength.'

[342] _Letters to Malthus_, p. 226.

[343] _Works_, p. 58 (ch. v.).

[344] _Ibid._ p. 211 _n._ (ch. xxvi.).

[345] _Ibid._ p. 258 (ch. xxxii.).

[346] _Works_, p. 248 (ch. xxii.).

[347] Bain's _James Mill_, p. 211.

[348] Editions in 1821, 1824, and 1826.

[349] _Autobiography_, p. 204.

[350] The first edition, an expanded version of an article in the _Encyclopaedia Britannica_, appeared in 1825.

[351] _Latter-day Pamphlets_ (New Downing Street). M'Crowdy is obviously a type, not an individual.

[352] See Mr. Hewin's life of him in _Dictionary of National Biography_.

[353] Fourth edition in 1827.

[354] Ricardo's _Works_, p. 164 _n._

[355] _External Corn-trade_, preface to fourth edition. J. S. Mill observes in his chapter upon 'International Trade' that Torrens was the earliest expounder of the doctrine afterwards worked out by Ricardo and Mill himself. For Ricardo's opinion of Torrens, see _Letters to Trower_, p. 39.

[356] _Production of Wealth_ (Preface).

[357] _Production of Wealth_ (Preface).

[358] _Political Economy_ (1825), p. 21.

[359] _External Corn-trade_, pp. xviii, 109, 139; _Production of Wealth_, p. 375.

[360] Originally in the _Encyclopaedia Metropolitana_, 1836.

[361] Senior's _Political Economy_ (1850), p. 26.

[362] _Ibid._ (1825), pp. 55, 129-131.

[363] Senior's _Political Economy_ (150), p. 125.

[364] _Ibid._ p. 135. M'Culloch admits the possibility that a man may judge his own interests wrongly, but thinks that this will not happen in one case out of twenty (_Ibid._ p. 15).

[365] See Torrens's _Production of Wealth_, p. 208; and M'Culloch's _Political Economy_ (1843), p. 294, where he admits some exceptions.

[366] _External Corn-trade_, p. 87, etc.

[367] _Political Economy_ (second edition), pp. 21, 22.

[368] _Ibid._ p. 67.

[369] _Political Economy_ (1825), p. 329.

[370] _Production of Wealth_, p. 34, etc.

[371] _Political Economy_ (1825), p. 318.

[372] Mill's _Political Economy_ (second edition), p. 102; M'Culloch's _Political Economy_ (1825), pp. 289-291.

[373] M'Culloch's _Political Economy_, p. 290.

[374] Preface to _External Corn-trade_.

[375] _Ibid._ p. 95.

[376] _Political Economy_ (1825), pp. 313-18. This argument disappears in later editions.

[377] _Ibid._ p. 217.

[378] _Political Economy_, p. 221. De Quincey makes a great point of this doctrine, of which it is not worth while to examine the meaning.

[379] _Political Economy_, p. 221 _n._

[380] _Ibid._ p. 336.

[381] _Ibid._ p. 337.

[382] 'Essay upon the Circumstances which determine the Rate of Wages' (1826), p. 113. This was written for Constable's _Miscellany_, and is mainly repetition from the _Political Economy_. It was republished, with alterations, in 1851.

[383] _Political Economy_, pp. 359-61.

[384] _Ibid._ (1843), p. 178. And see his remarks on the unfavourable side of the Factory System, p. 186 _seq._

[385] 'Wherever two persons have the means of subsisting,' as he quaintly observes, 'a marriage invariably takes place' (_Political Economy_, p. 154).

[386] _Political Economy_, p. 206.

[387] _Political Economy_, p. 344.

[388] _Ibid._ pp. 349-52.

[389] See pamphlet on the rate of wages, pp. 178-204.

[390] Tooke's _Thoughts and Details on the High and Low Prices of the last Thirty Years_ appeared in 1823 (second edition 1824). This was rewritten and embodied in the _History of Prices_, the first two volumes of which appeared in 1838. Four later volumes appeared in 1839, 1848, and 1857.

[391] The popular view is given by Southey. The Radicals, he says in 1823, desire war because they expect it to lead to revolution. 'In this they are greatly deceived, for it would restore agricultural prosperity, and give a new spur to our manufactures' (_Selections from Southey's Letters_, iii. 382. See also _Life and Correspondence_, iv. 228, 386).