Note 354 — Chapter III · : THE PESSIMISTS

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.