[348] “Every suggestion which does not tend to the reduction in number of the working people is useless, to say the least of it. All legislative interference must be pernicious.” (Quoted by Graham Wallas, Life of Francis Place. Place was the author of a book on population which appeared in 1822.)
[349] This is a fundamental distinction upon which Ricardo is always insisting. The greater or smaller quantity of labour employed in the production of corn bears no necessary relation to the worker’s wages. The one is merely a question of production, the other of distribution. The one is the task, the other the reward. But some might ask if the Ricardian theory of value does not state that the value of the product is determined by the quantity of labour necessary for its production, that this value will be subsequently divided between capitalist and worker, and that the greater this quantity the greater will be the share of each. Labour’s share may increase, but not the labourer’s, for we must not forget that when the price of corn goes up from 10s. to 20s. it is because the cultivation of poorer lands requires twice the number of labourers demanded by the better kind of land. Besides, it would be a strange thing to pay a man more as the work becomes less remunerative. All that one could hope for would be that the workers under the new conditions might be able to retain their old standard of life—that is, might be able to purchase the same quantity of bread despite the rise in price.
[350] “Thus, then, I have endeavoured to show that a rise of wages would invariably lower profits.”
“Thus in every case … profits are lowered … by a rise of wages.”
On the inexactness of the term “high rate of profits” as a synonym for a proportionally larger share of the produce see note, p. 162.
[351] Ricardo does not deny this. Indeed, he lays stress upon the fact that he is arguing on the assumption that the value produced remains the same. “I have therefore made no allowance for the increasing price of the other necessaries, besides food of the labourer; an increase which would be the consequence of the increased value of the raw materials from which they are made, and which would of course further increase wages and lower profits.”
[352] But this only means a rise in the nominal or money wage. It does not mean that the worker gets more corn; he only gets the same amount as before, because the price of corn has gone up and it makes no difference whether the man is paid in money or in kind.
[353] “For as soon as wages should be equal to the whole receipts of the farmer, there must be an end of accumulation: for no capital can then yield any profit whatever, and no additional labour can be demanded, and consequently population will have reached its highest point.” (Principles, ed. Gonner, p. 67.)
[354] When speaking of a reduction of capital’s share Ricardo frequently employs the phrase “a lowering of the rate of profits,” or “a fall in the rate of profits.” A fall in the rate is not necessarily synonymous with a reduction of capital’s share, however. The rate of profit simply implies a certain proportion between revenue and capital—5 per cent., for example; there is no suggestion of comparison between the quantities drawn by capitalist and workers respectively. Doubtless we must admit that when the rate of profit is diminished, ceteris paribus, the part drawn by capital relatively to labour’s share also diminishes, but it is clear that if the quantity of capital employed in any industry were to be doubled, or the product halved, capital, even at the rate of 3 instead of 5 per cent., would be drawing a more considerable share and leaving labour with less. Bastiat, as we shall have to note, made the same mistake.
[355] In a letter to Malthus, December 18, 1814, he admits with a sigh of regret that even if a belt of fertile land were added to this island of ours profits would still keep up. Free Trade has added the illimitable zone of fertile land which Ricardo dreamed of, with the result that both profits and rents have fallen.