THOMAS ROBERT MALTHUS. (continued 5)

LXXXI[254].

Gatcomb Park, 27 Nov., 1821.

My dear Malthus,

Your excuse for not going on with the discussion which you commenced is ingenious, and I ought to be satisfied with it, as it is accompanied with a pretty compliment to me—indeed as pretty an one as could well be paid to a person who is so uniformly your adversary. I however agree with you;—we know each other's sentiments so well that we are not likely to do each other much good by private discussion. If I could manage my pen as well as you do yours, I think we might do some good to the public by a public discussion.

I am sorry that I shall be obliged to miss two of the Political Economy meetings[255], as I shall not be in London till towards the latter end of the month of January.

On the 7th of December I am to dine at Hereford, by invitation, with Hume, at a public dinner, which is to be given to him for the purpose of presenting him a silver tankard and a hogshead of cider, in token of the respect and gratitude of the inhabitants of Hereford for his public services. Hume comes from town on the occasion, and is to be met at Ross at 11 o'clock in the forenoon, and escorted with due honour into Hereford. I hope everything will be conducted in an orderly and peaceable manner. I have a great aversion to a row.

I have not yet seen Torrens' book[256], nor shall I see it in all probability till I get to London. Torrens has some concern in the Champion, in which there is a paper weekly on Political Economy[257]. I think these essays are well done, but you probably would not agree with me in that opinion.

Ever yours, D. Ricardo.

Note.—This wide gap of more than a year between the eighty-first and the eighty-second letter of this collection may be filled up by a letter to Say (Œuvres Diverses, p. 423), dated from London, 5th March, 1822, and being a somewhat tardy answer to Say's letter of July, 1821, quoted above, p. 182. He says in effect: We are nearer agreement than I thought, and your distinction of natural and costly utility illustrated by the iron and the gold is objectionable only in point of expression. But it follows that commodities have a value equal to the quantity of labour spent on them, and that therefore if a pound of gold for example could be produced with less labour it would fall in value. You for your part therefore are bound to maintain it would be a less portion of our [social] wealth. Whereas for my part I do not estimate wealth by value, but by utility from whatever source derived. Your 'Catéchisme' (of which Francis Place has just given me the 2nd edition) says that a man's wealth is in proportion to the value and not to the quantity of the things he possesses, but, as you add that that same value is estimated by the quantity of other things these same things will buy, wealth turns out to be in proportion to quantity of goods after all. If wealth is value, then to lessen all costs, so as to produce all things with less labour, would be to make the wealth of the world no greater. After some remarks on the 'two loaves,' he concludes by saying that the Political Economy Club had made Say an honorary member. 'We hope in time to raise ourselves from a Club to the dignity of an Academy, and become a learned body with ever-increasing numbers.'

Say replies (1st May, 1822) that he gratefully accepts the honorary membership. As to the points discussed, some of their differences are merely verbal. His most important contention is that in production we exchange productive services for products, and the more products we obtain for them the more value they have, and the richer we are. 'Moreover, I do not think that we should aim at giving abstract definitions especially of wealth,—definitions, that is to say, in which we should abstract from the possessor and the thing possessed. This was the method of medieval disputants, and this was the very reason they could never come to an understanding. Too general a definition, which enters into none of the peculiarities of each several object, teaches us nothing.'

He concludes his letter by lamenting that his countrymen paid so little attention to economical questions. A full half of his audience in the Conservatoire des Arts et Métiers consisted of foreigners—English, Russians, Poles, Germans, Spaniards, Portuguese, and Greeks. The Crown Prince of Denmark got private lessons from him.

LXXXII.

Bromesberrow Place, Ledbury, Dec. 16, 1822.

My dear Malthus,

A long time has elapsed since there has been any connection between us, and I take an early opportunity after my arrival in England to address a few lines to you principally with a view of having some account of yourself and family, from your own pen. I have been actively employed since we last met, for not only have I wandered about Switzerland but I have been as far as Florence. In my way to Florence I deviated from the direct road to see Venice, and on my return from it I did the same thing in order to visit Genoa. Our journey has been an uncommonly prosperous one, for we have all enjoyed perfect health and have met with few or no difficulties. My companions as well as myself have very much enjoyed this tour. When I was at Geneva I saw a good deal of our friend Dumont, who accompanied us to Chamouny and returned with us to Geneva. At Coppet[258] I met M. Sismondi. He, the Duke of Broglie, and I had a long conversation on the points of difference between us: the Duke took my side, but after a long battle we each of us I believe remained in the same opinion that we commenced the discussion in. M. Sismondi has left a pleasing impression on my mind. Madame de Broglie had a great deal of patience and forbearance. She is, I think, a very agreeable lady. I stayed in Paris three weeks just previous to my return to England. M. de Broglie and the Baron de Stael arrived there after me. I had the pleasure of seeing them two or three times. I was very much pleased with M. Gallois[259], who made me acquainted with M. Destutt [de] Tracy[260], a very agreeable old gentleman, whose works I had read with pleasure. I do not entirely agree with him in his political economy; he is one of Say's school; there are, nevertheless, some points of difference between them. I saw Say several times, but our conversation did not turn much on subjects connected with political economy; he never led to those subjects, and I always fancied he did not much like to talk upon them. His brother, Louis Say[261], has published a thick volume of remarks upon Adam Smith's, his brother's, your, and my opinions. He is not satisfied with any of us. His principal object is to show that wealth consists in the abundance of enjoyable commodities; he accuses us all of wishing to keep up what we call valuable commodities, without any regard to quantity, about which only the political economist should be anxious. I do not believe that any of us will plead guilty to this charge. I feel fully assured that I do not merit it should be made against me.

M. Gamier[262] is dead; but previous to his death he had prepared an additional volume of notes for a new edition of his translation of the 'Wealth of Nations,' and which [sic] has lately been published. I had an opportunity of looking it over, and naturally turned to those places where he criticises me. He has bestowed a good deal of space on his remarks upon my work, but they do appear to me quite irrelevant. Neither he nor M. Say have (sic) succeeded in at all understanding what my opinions are. Your name often occurs in this last volume. I believe he differed from you also, but I had not time to read the whole of his book.

I hope you have been very industrious in my absence, and that we shall soon see the new edition of your last work[263]. I am anxious to know how you deal with the difficult question of value. I shall read you with great interest and attention.

I am sorry to find the agricultural distress continue. I was in hopes that it would have subsided before this time. I suppose we shall hear much on this subject next session of Parliament, and that I shall be a mark for all the country gentlemen. There is not an opinion I have given on the subject which I desire to recall. I only regret that my adversaries do not do me justice, and that they put sentiments in my mouth which I never uttered. Dr. Copplestone in his article in the Quarterly Review[264] charges me with maintaining the absurd doctrine that the price of gold bullion is a sure test of the value of bullion and currency. A Mr. Paget has addressed a (printed) letter[265] to me, in which I am accused of holding the same opinion, and everybody knows how pertinaciously Cobbet[t] persists in saying that I have always done so. I must fight my cause as well as I can; I know it is an honest one (in spite of Mr. Western's[266] insinuations), and, if it be also founded in truth and on correct views, justice will be finally done to me.

I arrived in London the beginning of last week; I saw Tooke for a few minutes, and was glad to hear from him that he had been writing and was nearly ready for the press. I have a very good opinion of his judgment and of the soundness of his views; he will, I think, from his practical knowledge, throw much light on the question of the influence of an over-supply or of an increased demand, without a corresponding supply, on price[267].

I am now on a visit to my son. On the 27th I shall go to Gatcomb for a week. From the 3rd to the 17th January I shall be with Mrs. Austin at Bradley, Wottonunderedge, and from the 17th to the 2nd February with Mrs. Clutterbuck, Widcomb, Bath. Where shall you pass your holidays? Is there any probability of my seeing you at Bath? I should be glad to meet you there.

I read in the papers with much concern of the renewal of disturbances amongst the young men at the college. I know how distressing to you such insubordination is, and greatly regretted that you should have been again exposed to it. I hope that order was quickly restored.

I saw Mr. Whishaw in London for a few minutes. I am not without hopes of seeing him at Mrs. Smith's at Easton Grey, where I mean to pass two nights on my way to Bradley....

Believe me, Ever truly yours, David Ricardo.

LXXXIII.

London, 29 April, 1823.

My dear Malthus,

After the most attentive consideration which I can give to your book[268], I cannot agree with you in considering labour, in the sense in which you use it, as a good measure of value. Neither can I discover exactly what connexion the constant labour necessary to produce the wages and profits on a commodity has with its value. If it be a good measure for one commodity, it must be for all commodities; and, as well as valuing wheat by the constant quantity of labour necessary to produce the particular quantity given to the workman, together with the profit of the farmer on that particular quantity, I might value cloth or any other thing by the same rule.

I know, indeed, that I might make out a table[269] precisely such as yours, in which the only alteration would be the word cloth instead of the word wheat, and you would probably then ask me whether your principle were not of universal application. I should answer that it contains in it that radical objection which you make against the proposed measure of your opponents. You may, if you please, arbitrarily select labour as a measure of value, and explain all the science of political economy by it, in the same way as any other man might select gold or any other commodity; but you can no more connect it with a principle or show its invariability than he could. Let me suppose that cloth could not be made in less than two years; the first line of my table must be altered, and the figures would stand in the following order:—

150, 100, 25 per cent. 7½, 2½, 10, 10, 15.

They would do so because ten pieces of cloth would, with the accumulation of profit for two years, be of the same value as a commodity, the result of the same quantity of labour, which could be produced in two years. I do not know how you will treat this objection, but in my opinion it is fatal to your whole theory.

I have the same objection to your measure, which I have always professed; you choose[270] a variable measure for an invariable standard. Who can say that a plague which should take off half our people would not alter the value of labour? We might, indeed, agree to transfer the variation to the commodities, and to say that they had fallen and not that labour had risen, but I can see no advantage in the change.

We might again discover modes by which the necessaries of the labourer might be produced with uncommon facility; and, in consequence of the stimulus which the good situation of the labourers might give to population, the reward of the labour in necessaries might be no higher than before; would it be right in this case, in which nothing had really altered but necessaries and labour, to say that they only had remained steadily at the same value, and, because a given quantity of corn or of labour will exchange only for (perhaps) 3/4 of the former quantity of linen, cloth, or money, to declare that it was the linen, cloth, or money which had risen in value, not labour and corn which had fallen?

Two countries are equally skilful and industrious; but in one the people live on the cheap food of potatoes, in the other on the dear food, wheat. You will allow that profits will be higher in the one country than the other. You will allow, too, that money may be nearly of the same value in both, if we choose anything else as a measure of value but labour. You will further agree that there might be an extensive trade between such countries. If a man sent a pipe of wine from the potato[271] country, which cost £100 and which might be sold at £110 in the wheat country, you would say that the wine was at a higher value in the country from which it was exported, merely because, in that country, it could command more labour. You would say this although the wine would not only exchange for more money but for more of every other commodity in the wheat country. I contend that this is a novelty which cannot be considered an improvement; it would confound all our usual notions, and would impose upon us the necessity of learning a new language. All mankind would say that wine was dearer in the wheat than in the potato country, and that labour was of less value in the latter. In page 31 there is a long passage on the reason for choosing labour as a standard, with which I am not satisfied. A piece of cloth is 120 yards in length and is to be divided between A and B; it is obvious that in proportion as much is given to A less will be given to B and vice versa. This will be true, although the value of the whole 120 yards be £100, £50, or £5. Is it not then a begging of the question to assume the constant value because the quantity is constant, and because it is always to be divided between two persons?

Allowing you your premises, I see very few instances in which I can quarrel with your conclusions. I agree with all you say concerning the glut of commodities; allow to you your measure, and it is impossible to differ in the result.

I hope soon to see you. I have hardly been able to find time to write this letter, I am so busily engaged. I am serving on a committee.

Ever yours, David Ricardo.

Note.—The table referred to in this letter is the following:—

Table illustrating the invariable Value of Labour and its Results.

2 3 4 5 6 7 8 9

Quarters of corn produced by 10 men or varying fertility of the soil. Yearly corn wages to each labourer, determined by the demand and supply. Advances in corn wages, or variable produce commanding the labour of 10 men. Rate of profits under the foregoing circumstances. Quantity of labour required to produce the wages of 10 men under the foregoing circumstances. Quantity of profits on the advances of labour. Invariable value of the wages of a given number of men. Value of 100 qrs. of corn under the varying circumstances supposed. Value of the product of the labour of 10 men under the circumstances supposed.

150 qrs.12 qrs.120 qrs. 25 p.c. 8 2 10 8·33 12·5

15013130 15·38 8·66 1·34 10 7·7 11·53

15010100 50 6·6 3·4 10 10 15

14012120 16·66 8·6 1·4 10 7·14 11·6

14011110 27·2 7·85 2·15 10 9·09 12·7

13012120 8·3 9·23 0·77 10 8·33 10·8

13010100 30 7·7 2·3 10 10 13

12011110 9 9·17 0·83 10 9·09 10·9

12010100 20 8·33 1·67 10 10 12

11010100 10 9·09 ·91 10 10 11

110 9 90 22·2 8·18 1·82 10 11·1 12·2

100 9 90 11·1 9 1 10 11·1 11·1

100 8 80 25 8 2 10 12·5 12·5

90 8 80 12·5 8·88 1·12 10 12·5 11·25

('Measure of Value,' p. 38.)

Columns 5 to 9 contain the debateable matter.

LXXXIV.

London, 28 May, 1823.

My dear Malthus,

I will, to the best of my power, state my objections to your arguments respecting the measure of value. You have yourself stated, as an objection to my view on this subject, that a commodity produced with labour and capital united, cannot be a measure of value for any other commodities than such as are produced precisely under the same circumstances, and in this I have agreed that you are substantially correct. If all commodities were produced in one day and by labour only without the assistance of capital, they would vary in proportion as the quantity of labour employed on their production increased or diminished. If the same quantity of labour was constantly employed on the production of money, money would be an accurate measure of absolute value, and, if shrimps or nuts or any other thing rose or fell in such money, it would only be because more or less labour was employed in procuring them. Under such circumstances every commodity which was the produce of a day's labour would naturally command a day's labour, and therefore the value of a commodity would be in proportion to the quantity of labour which it would command. But, though such a money would measure accurately the value of every commodity produced under circumstances exactly similar, it would not be an accurate measure of the value of other commodities produced with a large quantity of capital, employed for a length of time. In the case just supposed a quantity of shrimps would be as accurate a measure of value as a quantity of money produced by the same quantity of labour; but, when capital is employed and cloth is the product of labour and capital, you justly say that cloth is not a correct measure of the value of shrimps and of silver, picked up by labour alone, on the sea shore; and yet with singular inconsistency, as I cannot help thinking, you contend that the shrimps and the silver, picked up by labour alone on the sea shore, are accurate measures of the value of cloth. If you are right, then must cloth be also an accurate measure of value, because the thing measured must be as good a measure as the thing with which you measure. When I say that £4 and a quarter of wheat are of the same value, I can measure other values by the quarter of wheat as well as by the £4. You say: 'It is conceded that, when labour alone is concerned in the production of commodities, and there is no question of time, both the absolute and exchangeable values of such commodities may be accurately measured by the quantity of labour employed upon them.' Nothing can, I think, be more correct, and it is perfectly accordant with what I have been saying. Your mistake appears to me to be this: you show us that under certain conditions a certain commodity would be a measure of absolute value, and then you apply it to cases where the conditions are not complied with, and suppose it to be a measure of absolute value in those cases also. You appear to me, too, to deceive yourself when you think you prove your proposition, because your proof only amounts to this, that your measure is a good measure of exchangeable value but not of absolute value. You say: 'If the accumulated and immediate labour worked up in a commodity be of any assumed value, £100 for instance, and the profits of the value of £20, including the compound profits upon the labour worked up in the materials, the whole will be of the value of £120. Of this value 1/6 only belongs to profits, the rest or 5/6 may be considered as the product of pure labour.' This is quite true, whether we value the commodity by the quantity of labour actually employed upon it, by the quantity which it will command when brought to market, or by the quantity of money, or any other commodity, for which it is exchanged; 5/6, in all cases, will belong to the workmen and 1/6 to the master. 'Consequently the value of 5/6 of the produce is determined by the quantity of labour employed on the whole; and the value of the whole produce by the quantity of labour employed upon it with the addition of 1/6 of that quantity.' This is really saying no more than that, when profits are one sixth of the value of the whole commodity (in which no rent enters), the other 5/6 go to reward the labourers, and that the portion so going to the labourers may itself be resolved into labour and profits in the same proportion of 5 and 1. Five men produce six pieces of cloth, of which 5 are paid to them, the men; if profits fall one half, the men will receive 5½ pieces, and then you say the cloth is of less value; but in what medium? In labour, you answer. You appear to me to advance a proposition that cloth is of less value when it will exchange for less labour, and to prove it by showing the fact, merely, that it actually does exchange for less labour.

You say: 'But, when labour is concerned, it follows from what has been conceded that the value of the produce is determined by the quantity of labour employed upon it.' By value here you mean absolute value; and then you immediately apply this measure of absolute value, which is only conceded in a particular case, to a general proposition, and say 'consequently;' consequently on what? On this particular case; 'consequently the value of 5/6 of the produce is determined by the quantity of labour employed on the whole,' that is to say 'consequently the quantity of labour which 5/6 of the produce will command is determined by the quantity of labour employed on the whole;' the same is true, in the same sense, of 5/6, 5/7, 5/8, 5/9 or of any other proportions in which the whole may be divided. My only object has been to show, and, if I am not mistaken, I have succeeded in showing, that a measure of value, which is only allowed to be accurate in a particular case where no capital is employed, is arbitrarily applied by you to cases where capital and time necessarily enter into the consideration.

I fear I have been guilty of many repetitions. I shall not regret it, however, if I have made myself understood.

[The last sheet is wanting. The fragment on page 105 does not match this fragment.]

Note.—On 12th June, 1822, in one of Ricardo's most important speeches on Resumption (afterwards published as a pamphlet), he speaks of those who propose to make Corn, on a ten years' average, the standard of value instead of money. To prove gold more variable than corn, they and their authorities, Locke and Adam Smith are (he says) obliged to begin by supposing gold invariable. 'Unless the medium in which the price of corn is estimated could be asserted to be invariable in its value, how could corn be said not to have varied in relative value? If they must admit the medium to be variable—and who could deny it?—then what became of the argument?' Nothing is more difficult than to ascertain the variations in the value of money: 'To do so with any accuracy we should have an invariable measure of value; but such a measure we never had nor ever can have.' (Cf. Pol. Econ. and Tax. ch. i. § 7, Works, p. 28.) But we can speak with accuracy of depreciation; we can see to it that the standard is always the same standard, and that our currency conforms to it, even if the standard itself may vary in value. (See Note to Letter XXXI.)

LXXXV.

London, 13 July, 1823.

My dear Malthus,

M^cCulloch and I did not settle the question of value before we parted,—it is too difficult a one to settle in a conversation; I heard everything he had to urge in favour of his view, and promised, during my holiday, to bestow a good deal of consideration on it. He means exactly what you say;—he does not contend that commodities exchange for each other according to the quantity of labour actually worked up in them, but he constitutes a commodity the general measure, by which he estimates the value of all others. A pipe of wine kept for three years has no more labour worked up in it than a pipe of wine kept for a day, but he says the additional value on account of time must be estimated by the accumulations which a like amount of capital actively employed in the support of labour would make in the same time. An oak-tree which has been growing for 200 years has very little labour actually worked up in it, but its value is to be estimated by the accumulated capital which the original labour employed would give in the same time. He and you in fact differ as to your original measure. I think he could not give any other good reason for choosing a medium which requires labour and capital to produce it, rather than one which requires labour only, excepting that commodities in general require the combination of the two, and that a measure, to have any claim to be even an approximation to an accurate one, should itself be produced under circumstances somewhat similar to the commodities which it is to measure. If all things required precisely the same quantities of capital and labour, and for the same length of time, to produce them, any one of them would be an accurate measure of the rest; but this is not the case; the conditions admit of infinite variety, and therefore whichever we choose it can only be an approximation to truth, and we are bound to give good reasons for preferring it.

I should, indeed, be wanting in candour if I refused to admit that my money measure would not measure the quantity of labour worked up in commodities. I have admitted it over and over again. I am also ready to admit that your money measure will measure exactly the quantity of labour and profits together of which commodities are composed, but so will my money measure. Neither of them will measure the quantity of labour alone worked up in commodities, but they will both measure the quantity of labour and profits together of which commodities are composed. Suppose gold always to require the same quantity of labour, for one year, before it can be brought to market, will you say that all variations in wages and profits may not be estimated in this medium? You would indeed say that many of those variations would be ascribable to the variations in the value of the medium, and not to any alteration in the value of the thing measured, because you do not think that it is any proof of invariability in a commodity that it requires always the same quantity of labour, and the same duration of time to produce it. If I allow the justice of your objection, I am at liberty to apply the same to your medium. The same quantity of labour applied for a day will always produce the same given quantity of gold; gold is therefore an invariable measure, you say. I find this gold vary in relation to another commodity which always requires the same quantity of labour and capital to produce it; you say it is never the gold but it is always the commodity which varies, and, when you are asked why, you answer because labour never varies. Double the quantity of labour in a country or diminish it one half, always leaving the funds which are to employ it at precisely the same amount, and you tell us, notwithstanding the condition of the labourer is in the one case a very distressed one, in the other a very prosperous one, that the value of his labour has not varied. I cannot subscribe to the justness of this language. The question is whether you are right, not whether I am wrong. Suppose that a man in India could pick up in a day precisely the same quantity of gold as in England, and that all trade in provisions were forbid between the two countries. The small quantity of rice and clothing in India which are necessary for the support of a labourer would be of precisely the same value as the quantity of wheat and clothing necessary for a labourer in England. But this would not long continue. All manufactured commodities would be of a high comparative money value in India, and consequently we should export manufactured commodities and import gold; the reward of a labourer in England would come to be a much larger quantity of gold than he could actually pick up here. No gold would be then obtained in England but by means of importation. Under these circumstances you would say that money was of a low value in England, and you would be correct if all men agreed to constitute labour the measure of value; but in this they do not agree, and, as we should find that at the very moment that gold was low, relatively to labour, in England, it was high relatively to manufactured commodities of every description, with which in fact gold would be purchased from India, if we took these commodities for the measure, we should be bound to say that gold was cheap in England and dear in India. You must remember that the point in dispute is whether labour be the correct measure of value; you must not then take the fact for granted, and then offer it as a proof of your correct conclusion.

We leave London for Gatcomb early to-morrow morning.... We shall have one bed disengaged if you and Mrs. Malthus will come over to us. I am sorry I cannot ask all your party.

Ever truly yours, David Ricardo.

LXXXVI[272]

[Minchinhampton, Aug. 3, 1823.]

My dear Malthus,

The value of almost all commodities is made up of labour and profits, but in choosing a measure of value it is not necessary that it should possess the property of determining what proportion of the value of the commodity measured belongs to wages, and what proportion belongs to profits. You make it a reproach on my proposed measure that it will not do this, and prefer your own because it will. Now, as I do not think this quality essential to a measure of value, I shall not defend mine for not possessing this quality. This consideration appears to me wholly foreign to the question under discussion.

We agree, I believe, that nothing can be a measure of value which does not itself possess value. We agree too, I believe, that a measure of value to be a good one should itself be invariable, and further that in selecting one thing as a measure of value rather than another we are bound to show some good reason for such selection, for, if a good reason be not given, the choice is altogether arbitrary. Now the measure proposed by you has value, and therefore [is] not to be objected against on account of any deficiency of that quality; but I do not think it is invariable, and by the concession which you make in your last letter you appear to give up your measure, for you say that 'you expressed yourself without sufficient care, when you intimated that, if any number of labourers were imported or exported, the value of labour would remain the same.' This is a large concession indeed, and I think entirely subverts your measure, because, if it be true of labourers exported or imported, it must be true also of labourers born or dying in the country. If by poor laws imprudent marriages are encouraged and population becomes excessive, the effect on the value of labour will be precisely the same as if labourers had been imported; and, if an epidemic disorder break out and many labourers die, it will be the same as if they were exported. Nay more, if the people be well educated and be taught caution and foresight with regard to the increase of their numbers, who shall say that the effect on the value of labour will not be the same as an exportation of labourers? You have, I think, been imprudent, which is much at variance with your usual practice, in conceding this point, and you allow us to enter into your fortress and spike all your guns. You add indeed: 'This will only be true after the supply comes to be affected by the increased or diminished number of labourers.' When will the supply not be affected by the increased or diminished number? What follows will not assist you, for you say: 'If the corn obtained by twenty men be divided among ten, then the value of the wages of ten men will be less than the quantity of labour employed to produce them with the addition of profits, and vice versa.' What profits? They might have been 50 per cent., and may from the circumstance mentioned be reduced to 5 per cent. You speak of profits in this place as if they were a fixed amount, and forget that they fall when wages rise. Besides, I will not admit the extravagant supposition that the corn obtained by the labour of twenty men is bestowed as wages on ten men; but I will suppose that the corn obtained by twenty men had been sufficient to command the labour of thirty men, but that owing to a diminished supply of labour this same quantity of corn obtained by the same number of men is bestowed as wages on twenty-two men. In this case I ask you whether corn has fallen in value in the proportion of thirty to twenty-two? If you say Yes, then you do not admit that labour may rise in value in consequence of exporting labourers; and, if you say No, there is an end of your measure, because you then acknowledge that commodities do not vary according to the quantity of labour they can command. I do not see how you are to extricate yourself from this dilemma. I cannot discover what the value of the precious metals in different countries can have to do with this question. A piece of cloth or a piece of muslin can command more labour in India than in England; on this we are agreed, but we are not agreed in our explanation of this fact. You say the piece of cloth or muslin is more valuable in India than in England, and your proof is that it can command more labour in India. You would say so, although both cloth and muslin were exported from India to England, from the country where they are dear to the country where they are cheap. I, on the contrary, say that it is not the cloth and muslin which are dear in India and cheap in England, but it is labour which is cheap in India and dear in England, and that cloth and muslin would come to England from India although there were no such commodities as gold and silver on the face of the earth. I say further that you are bound to admit this by the concession which you have made, for you must admit that labour might be rendered cheap as effectually in England by prevailing on English labourers to be satisfied with the modest remuneration of food paid in India, as by the importation of labourers; and, if you do not admit it, I beg to ask why you refuse to do so. I beg you to point out the distinction between a supply of labourers from abroad, with a consequently reduced remuneration of food, and a supply of labourers from the principle of population, and a consequent reduction in the remuneration paid in food. Can you be said to have given a good reason for the selection which you have made of a measure of value when it will not bear close examination? You have repeatedly said that a commodity, on which a quantity of labour has been bestowed, will always exchange for a like quantity, together with an additional quantity which will constitute the profits on the advances. Now this I consider to be your main proposition, and on its truth must depend according to your own view the correctness of your measure. Is it true then that every commodity exchanges for two quantities of labour, one equal to the quantity actually worked up in it, another equal to the quantity which the profits will command? I say it is not. This year corn is cheap, and I must give a certain quantity of it to procure the labour of ten men to be worked up in the commodity which I manufacture; but next year, when I take my commodity to market, corn is dear and wages high, and therefore to procure a certain quantity of labour I must give more of my finished commodity than I should have given if corn had been plenty [sic] and wages low. If corn had been cheap and wages low, my profits would have been high; as it is, they are low. I want to know in these two cases whether the commodity does really exchange for the two specific quantities of labour mentioned above. You answer my question by saying that you always make a reserve of the first quantity, and all above it you call profits. But I contend that labour of one value has been expended on the commodity, and, when it comes to market, it is exchanged for labour of another value, and that is the sole reason why the balance, over and above the labour expended on it, is small. Why is it small but because the value of labour is high? No such thing, you say; labour never varies; and yet you cannot but confess that, if corn had been abundant and if wages had remained the same, the manufactured commodity would have exchanged for a great deal more labour. You say: 'How comes it about that labour should remain of the same value in the progress of society, when it is known that it must require more labour to produce it?' You must mean 'to produce the remuneration paid for it;' and you add: 'The answer to this question is that, as profits depend upon the proportion of the whole produce which goes to labour, it must necessarily happen that the increase of value occasioned by the additional quantity of labour will be exactly counterbalanced by the diminution in the amount of profits, leaving the value of labour the same.' I confess I cannot understand this answer. We are inquiring about the meaning which should be attached to the words 'increase of value,' 'diminution of value.' You tell me that increase of value means an increased power of commanding labour. I deny that this definition is a correct one, because I deny the invariability of the standard measure you have chosen; and to prove its invariability you speak of the proportion in which the whole produce is divided, and that, if wages have more, profits have less;—all which is true, but what connection do you prove between this proposition and the invariability in your measure of value? In your answer you use the words 'increase of value;' that is to explain the meaning of the words required to be understood by the use of the words themselves. You mistake M^cCulloch's and my objection to your doctrine if you suppose it to be on account of its making the same quantity of labour of the same value, while the condition of the labourer is very different; we do not object to it on that account, because, as you justly observe, our own doctrines require the same admission; but we object to your saying that, from whatever cause it may arise that the labourer's condition is deteriorated, he is always receiving the same value as wages. When our labourers are badly off, although (we say) they have wages of the same value, profits must necessarily be very low; according to you wages would be of the same value whether profits were 2 per cent. or 50 per cent.

I think I have shown you that your long letter was acceptable by doing that which is really a difficult task to me, writing a longer one myself. I am, however, only labouring in my vocation and trying to understand the most difficult question in political economy. All I have hitherto done is to convince myself more and more of the extreme difficulty of finding an unobjectionable measure of value. As far as I have yet been [able] to reflect upon McCulloch's and Mill's suggestion, I am not satisfied with it. They make the best defence for my measure[273], but they do not really get rid of all the objections. I believe however that, though not without fault, it is the best.

I am sorry you could not spare a few days for a visit to us; if you will come to Gatcomb before we go to town, I shall be very glad to see you.

I have been writing a few pages in favour of my project of a National Bank[274], with a view to prove that the nation would lose nothing in profits by abolishing the Bank of England, and that the sole effect of the change would be to transfer a part of the profits of the bank to the national treasury....

Yours ever, David Ricardo.

Note.—Arguments very similar to those of this letter have been used against Malthus by Julius Pierstorff, in his book on 'Die Lehre vom Unternehmergewinn' (Berlin, 1875), where the views of Malthus and Ricardo are compared with one another. There is, however, shrewder criticism of Ricardo's whole doctrine in Böhm Bawerk's 'Geschichte und Kritik der Kapital-Zins-Theorien,' Innsbrück, 1884. A neat reductio ad absurdum of the view, held more or less explicitly by MacCulloch and others, that cost is enough to explain value, is given by Böhm Bawerk in his 'Grundzüge der Theorie des wirthschaftlichen Güterwerths' (Jena, 1886, p. 72), in a passage of which this is the conclusion: 'To explain the value of a commodity by its cost is to explain it by the value of the means of its production. But how have the latter their value? Logically we must answer from their cost, in other words from the means of production a degree farther back, and so on backwards. Now, clearly, if we pursue this regress, we either arrive at commodities which are not themselves 'produced,' e.g. land and labour, and our explanation of all value by cost has failed us; or else we explain even these sophistically as being in a sense 'products,' and owing their value to their cost, e.g. the labour as owing its value to the cost of the labourer's subsistence, and in this case we are bound to go farther back and explain the value of the means of subsistence by their cost, i.e. the labour that produced them; and we reason endlessly in a circle.'

LXXXVII[275].

Gatcomb Park, Minchinhampton, 15th Aug., 1823.

My dear Malthus,

It is a prudent step in you to withdraw your concession, for I am sure that your theory could not stand with it. You find fault with my measure of value, you say, because it varies with the varying profits of other commodities. This is, I acknowledge, an imperfection in it when used to measure other commodities in which there enters more or less of profits than enters into my measure; but you do not appear to see that against your measure the same objection holds good, for your measure contains no profits at all, and therefore never can be an accurate measure of value for commodities which do contain profits. If I had no other arguments to offer against your measure, this which I am going to mention when used to you would be fatal to it. You say that my measure cannot measure commodities produced by labour alone. Granted; but, if it be true, how can your measure measure commodities produced with labour and profits united? You might just as well say that three times two are six and that twice three are not six, or that a foot measure was a good measure for a yard but a yard was not a good measure for a foot. If your measure will measure my commodity accurately, mine must do the same by yours. These are identical propositions, and I confess I see no answer that can be made to me. The fact really is that no accurate measure of absolute value can be found. No one doubts the desirableness of having one; but all we can ever hope to get is one tolerably well calculated to measure the greatest number of commodities, and therefore I should have no hesitation in admitting your measure to be the best, under all circumstances, if you could show that the greatest number of commodities were produced by labour alone without the intervention of capital. On the other hand, if a greater number of commodities are produced under the circumstances which I suppose to attend the production of the commodity which I choose for my measure, then mine would be the best measure. You will understand that in either case I suppose a degree of arbitrariness in the selection, and I only contend that it would be best employed in selecting mine.

When you say that my great mistake is in considering commodities made up of labour alone and not of labour and profits, I think the error is yours, not mine, for that is precisely what you do; you measure commodities by labour alone, which have both labour and profits in them. You surely will not say that my money, produced by labour and capital, and by which I propose to measure other things, omits profits. Yours does; what profits are there in shrimps or in gold picked up by daily labour, on account of the labourer, on the sea-shore? How much more justly then might this accusation be brought against you!

You object to me that I am inconsistent in wishing to leave the consideration of the value of money here and in India out of the question, when speaking of the value of labour and of commodities in this country and in India. I, you say, to leave out the consideration of the value of the precious metals, who have proposed a measure formed of them! There is nothing inconsistent in this. In examining your proposition which rejects my measure and adopts another, I must try it by your doctrines and not by mine which you reject. A conclusion founded on my premises might be a just one, but, if you dispute my premises and substitute others, the conclusion may no longer be the same; and in examining your doctrines I must attend only to the conclusions to which your premises would lead me. You ask: 'Would you really say that cloth and muslin were not dear in India where they cost four or five times as much labour as in England?' You know I would not, because I estimate value by the quantity of labour worked up in a commodity; but by the cost in labour of cloth and muslin in India you do not mean the quantity of labour actually employed on their production, but the quantity which the finished commodity can command in exchange. The difference between us is this; you say a commodity is dear because it will command a great quantity of labour, I say it is only dear when a great quantity has been bestowed on its production. In India a commodity may be produced with twenty days' labour, and may command thirty days' labour. In England it may be produced by twenty-five days' labour and command only twenty-nine. According to you this commodity is dearer in India, according to me it is dearer in England.

Now here is my objection against your measure as a general measure of value, that, notwithstanding more labour may be bestowed on a commodity, it may fall in value estimated in your measure; it may exchange for a less quantity of labour. This is impossible when you apply your measure legitimately to those objects only which it is calculated to measure. Would it be possible, for example, to apply more labour to the production of shrimps or to pick up grains of gold on the sea-shore, and yet to sell those commodities for less labour than before? Certainly not; but it would be quite possible to bestow more labour on the making of a piece of cloth, and yet for cloth to exchange for a less quantity of labour than before. This is another argument in my mind conclusive against the expediency of adopting your measure.

I repeat once more that the same trade precisely would go on between India and Europe, as far as regards commodities, if no such thing as money made of gold and silver existed in the world. All commodities would in that case as well as now command a much larger quantity of labour in India than in England; and, if we wanted to know how much more, either of those commodities, as well as money, would enable us to ascertain. The same thing which makes money of a low value in England makes many other commodities of a low value there; and the political economist in accounting for the low value of one accounts at the same time for the low value of the others. I do not object to accounting for the low value of gold in particular countries; but I say it is not material to an enquiry into a general measure of value, particularly if it be itself objected to as forming any element in that measure.

Suppose a farmer to have a certain quantity of cattle and implements and a hundred quarters of wheat,—that he expends this wheat in supporting a certain quantity of labour, and that the result is 110 quarters of wheat and an increase of one-tenth also in his cattle and implements; would not his profits be 10 per cent. whatever might be the price of labour the following year? If the 110 quarters could command no more labour than the 100 quarters could command before, he would, according to you, have made no profits; and you are right if we admit that yours is a correct measure of value; he would have a profit in kind but no profit in value. If wheat was the measure of value, he would have a profit in kind, and the same profit in value. If money was the correct measure of value and he commenced with £100, he would have 10 per cent. profit if the value of his produce was £110. All these results leave the question of a measure of value undecided, and prove nothing but the convenience, in your estimation, of adopting one in preference to another. The labourer, however, who lived by his labour would find it difficult to be persuaded that his labour was of the same value at two periods, in one of which he had abundance of food and clothing, and in another he was absolutely starving for want. What he might think would certainly not affect the philosophy of the question; but it would be at least as good a reason against the measure you propose as that of the farmer in favour of it, when he found that he had no profits because he had no greater command of labour, although he might have more corn or more money. You call every increase of value nominal which is not an increase in the measure you propose. I do not object to your doing so; but those who do not agree with you in the propriety of adopting this measure may argue very consistently in saying they are possessed of more value when they have £110 than when they had £100, although the larger sum may not when it is realized command so much labour as the smaller sum did before, because they not only admit but contend that labour may rise and fall in value, and therefore in respect to labour he may be poorer, although he possesses a greater value.

I have said that the value of most commodities is made up of labour and profits. If this be so, you observe, 'it is as clear as the sun that the variable wages which command the same quantity of labour must be of the same value, because they will always cost in their production the same quantity of labour with the addition of the profits upon that labour.' I confess that I cannot see the connection of this conclusion with the premises. Whether you divide a commodity in eight, seven, or six divisions, it will always be divided into two portions, variable portions, but always two. If the division be in eight, the portions may be six and two, five and three, four and four, seven and one. If seven, they may be six and one, five and two, four and three, and so on. Now this is my admission. What we want to know is what the number of those divisions are, or what the value of the commodity is, whether eight, seven, or six? And have I come a bit nearer to this knowledge by admitting that whatever the value may be it will be divided between two persons? Whatever you give to the labourer is made up of labour and profits, and therefore the value of labour is constant! This is your proposition. To me it wants every quality of clearness. I find that at one time I give a man ten bushels of wheat for the same quantity of his labour for which at another time I give him eight bushels. Wheat, according to you, falls in the proportion of ten to eight. I ask why? And your answer is, because 'as the positive value of the labour worked up in the wages increases, the positive value of the profits (the other component part of their whole value) diminishes exactly in the same degree.' Now does this positive value refer to the same quantity of wheat? Certainly not, but to two different quantities, to ten bushels at one time, to eight at another. You add: 'If these two propositions['] (namely the one I have just mentioned and the invariability of labour as a measure of value) 'can properly be considered as having no connection with each other, I must have quite lost myself on these subjects, and can hardly hope to show the connection by anything which I can say further[']. I hope you do not suspect me of shutting my eyes against conviction; but, if this proposition is so very clear as it is to you, I cannot account for my want of power to understand it. I still think that the invariability of your measure is the definition with which you set out, and not the conclusion to which you arrive by any legitimate argument. My complaint against you is that you claim to have given us an accurate measure of value, and I object to your claim, not that I have succeeded and you have failed, but that we have both failed, that there is not and cannot be an accurate measure of value, and that the [most th]at any man can do is to find out a measure of value applicable in a great many cases, and not very far deviating from accuracy in many others. This is all I have pretended to do, or now pretend to have done; and, if you advanced no higher claims, I would be more humble; but I cannot allow that you have succeeded in the great object you aimed at. In answering you I am really using those weapons by which alone you say you can be defeated, and which are I confess equally applicable to your measure and to mine, I mean the argument of the non-existence of any measure of absolute value. There is no such thing; your measure as well as mine will measure variations arising from more or less labour being required to produce commodities, but the difficulty is respecting the varying proportions which go to labour and profits. The alteration in these proportions alters the relative value of things in the degree that more or less of labour or profit enters into them; and for these variations there has never been, and I think never will be, any perfect measure of value.

I have lost no time in answering your letter, for I am just now warm in the subject, and cannot do better than disburthen myself on paper.

Ever, my dear Malthus, Truly yours, David Ricardo.

LXXXVIII[276].

Gatcomb Park, 31 Aug., 1823.

My dear Malthus,

I have only a few words more to say on the subject of value, and I have done. You cannot avail yourself of the argument that a foot may measure the variable height of a man, although the variable height of a man cannot truly measure the foot, because you have agreed that under certain circumstances the man's height is not variable, and it is to those circumstances that I always refer. You say of my measure, and say truly, that if all commodities were produced under the same circumstances of time, etc., as itself, it would be a perfect measure, and you say further that it is now a perfect measure for all commodities produced under such circumstances. If then under certain circumstances mine is a perfect measure, and yours is always a perfect one, under those circumstances certain commodities ought to vary in these two measures just in the same degree. Do they so? Certainly not, then one of the measures must be imperfect. If they are both perfect mine ought to measure yours as well as yours mine.

There is no impropriety in your saying with Adam Smith[277] that 'labour will measure not only that part of the whole value of the commodity which resolves itself into labour, but also that which resolves itself into profit,' because it is the fact. But is not this true also of any variable measure you could fix on? Is it not true of iron, copper, lead, cloth, corn, etc., etc.? The question is about an invariable measure of value, and your proof of invariability is that it will measure profits as well as labour, which every variable measure will also do.

I have acknowledged that my measure is inaccurate, you say, I have so; but not because it would not do everything which you assert your's will do, but because I am not secure of its invariability. Shrimps are worth £10 in my money;—it becomes necessary, we will suppose, in order to improve the shrimps to keep them one year when profits are 10 per cent.; shrimps at the end of that time will be worth £11. They have gained a value of £1. Now where is the difference whether you value them in labour and say that at the first period they are worth ten days' labour and subsequently eleven, or say that at the first period they are worth £10, subsequently £11?

I am not sure that your language is accurate when you say that 'labour is the real advance in kind, and profits may be correctly estimated upon the advances whatever they may be.' A farmer's capital consists of raw produce, and his real advances in kind are raw produce. His advances are worth and can command a certain quantity of labour undoubtedly, and his profits are nothing unless the produce he obtains will command more if he estimates both advances and profits in labour, but so it is in any other commodity in which he may value his advances and returns. Does it signify whether it be labour or any other thing, provided there be no reason to suspect that it has altered in value? I know that you will say that provided his produce is sure to command a certain quantity of labour he is sure of being able to reproduce, not so if he estimates in any other thing, because that thing and labour may have undergone a great relative alteration. But may not the real alteration be in the value of labour, and, if he act on the presumption of its remaining at its then rate, may he not be wofully mistaken, and be a loser instead of a gainer? Your argument always supposes labour to be of an uniform value, and if we yielded that point to you there would be no question between us. A manufacturer who uniformly used no other measure of value than that which you recommend would be as infallibly liable to great disappointments as he is now exposed to in the vulgar variable medium in which he is accustomed to estimate value.

And now, my dear Malthus, I have done. Like other disputants, after much discussion we each retain our own opinions. These discussions, however, never influence our friendship; I should not like you more than I do if you agreed in opinion with me.

Pray give Mrs. Ricardo's and my kind regards to Mrs. Malthus.

Yours truly, David Ricardo.

Note.—Ricardo died at Gatcomb on 11th Sept., 1823, of an abscess in the head, which caused great suffering. He was buried in the vault of a church at Huish, near Chippenham, Wilts; and his friend Joseph Hume was among the mourners. As he was only fifty-one years of age, his death was a great shock to his friends and caused something like dismay among his disciples. 'I never loved anybody out of my own family so much. Our interchange of opinions was so unreserved, and the object after which we were both enquiring was so entirely the truth and nothing else, that I cannot but think we sooner or later must have agreed.' So said Malthus, in Empson's hearing[278].

James Mill[279], albeit unused to the melting mood, was overwhelmed with grief, and in a letter to MacCulloch, 19th Sept., 1823, writes of the closing scenes with much tenderness of feeling.

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