Phæd. Again I ask, then, who is to pay the three shillings?
X. The three shillings will be paid out of profits.
Phæd. What, without reimbursement?
X. Assuredly, without a farthing of reimbursement: it is Mr. Ricardo's doctrine that no variation in either profits or wages can ever affect the price; if wages rise or fall, the only consequence is, that profits must fall or rise by the same sum; so again, if profits rise or fall, wages must fall or rise accordingly.
Phæd. You mean, then, to assert that, when the value of the labor rises (as in the first of your two cases) by three shillings, this rise must be paid out of the six shillings which had previously gone to profits.
X. I do; and your reason for questioning this opinion is, I am sure, because you think that no capitalist would consent to have his profits thus diminished, but would liberate himself from this increased expense by charging it upon the price. Now, if I prove that he cannot liberate himself in this way, and that it is a matter of perfect indifference to him whether the price rises or not, because in either case he must lose the three shillings, I suppose that I shall have removed the sole ground you have for opposing me.
Phæd. You are right: prove this, X., "et eris mihi magnus Apollo."
X. Tell me, then, Phædrus, when the value of labor rises—in other words, when wages rise—what is it that causes them to rise?
Phæd. Ay, what is it that causes them, as you say? I should be glad to hear your opinion on that subject.
X. My opinion is, that there are only two [Footnote: There is another case in which wages have a constant tendency to rise—namely, when the population increases more slowly than the demand for labor. But this case it is not necessary to introduce into the dialogue: first, because it is gradual and insensible in its operation; secondly, because, if it were otherwise, it would not disturb any part of the argument.] great cases in which wages rise, or seem to rise: