HKB
he consumed in his family the whole increased produce, without augmenting his capital, wages would remain stationary, and not be in any way affected by the increased facility of production.
I cannot agree with your proposition, namely, [']That the means of employing capital profitably can never co-exist with an abundant capital and produce and a stationary population, on account of the necessary effect of such a state of things in increasing the real price of labour,' because I consider the rise of wages as by no means a necessary effect of an abundant capital and produce, for it may be accompanied with new facilities in procuring corn, and then wages even if they should rise would not lessen profits, they will only keep them lower than they otherwise would be. In the case which we were considering the other night, if every lady made her own shoes, a part of the capital now employed in making shoes by the shoemakers would be otherwise employed. The same labour would be bestowed in the production of other objects desirable to these lady shoemakers, who would have both the power and the will to purchase them from the savings which would accrue to them by employing their labour productively. There is a great difference between [the] common effects of an accumulation of capital, and the employing the same capital more productively. The first is generally attended with a rise of wages and a fall of profits for a time at least,--but the second may exist for an indefinite length of time without producing any such effects. In the case of great improvements in machinery,--capital is liberated for other employments and at the same time the labour necessary for those employments is also liberated,--so that no demand for additional labour will take place unless the increased production in consequence of the improvement should lead to further accumulation of capital, and then the effect on wages is to be ascribed to the accumulation of capital and not to the better employment of the same capital. If the population were to be stopped whilst accumulation continued the effects which you enumerate would undoubtedly follow, but this would arise from the demand for labour not being adequately supplied,--it would be the effect of accumulation which would operate so powerfully that it would be but slightly checked by the facility of production, but it would not by any means be the consequence of such facility.
It is true that the rate of profits depends upon the scanty or abundant supply of capital compared with the means of employing it profitably,--and these means will as you say upon the common principles of supply and demand be increased either by a diminution of capital or by an extension of the market for it. Our inquiry is in fact what the causes are of an extension of the market, and I hold that the most powerful, and the only one which operates permanently, is a reduction in the relative value of food. You appear to me to concede a little respecting demand being regulated by the power of production,--but you are yet very far from yielding all that I demand. I hope we shall meet this month, but I cannot yet say whether I can leave London.
Yours very truly, D. RICARDO.
XXXVIII.
LONDON, 17 Oct., 1815.
MY DEAR SIR,
Mrs. Ricardo and I are sorry that Mrs. Malthus will be prevented from accompanying you when you pay us a visit at Gatcomb. We should have been very happy to have shown her some of the beauties of our county. When you come, perhaps you will bring your gun with you. Though I am no sportsman myself, I will endeavour to procure you the best sport that my influence can command.