Note 183-4 — Chapter IV

Compare Hermann, Staatsw. Unters., 240 ff. Very much depends on whether the new increased consumption (of workmen when wages are rising, of capitalists when wages are declining) is of goods which are mainly the product of large capital, large factories, etc., or chiefly of common labor, (von Mangoldt, Grundriss, 155 seq.) When Adam Smith suggests that the relation between wages and the profit of capital is determined by this: whether there is a market demand for more work or more commodities, for more "work to be done" or "work done" (I, ch. 7), he is, spite of appearances, very unsatisfactory. Malthus distinguishes a restrictive principle of the rate of interest, viz.: the return made to the least productive agricultural capital, and a regulative one, viz.: the reciprocal relation between demand and supply of capital and labor. (Principles, ch. 5, sec. 4.) Ricardo, ch. 6, makes the profit of capital at all times and in every country depend on the quantity of labor which it is necessary to expend on the land which pays no rent, in order to satisfy the wants of workmen—a very correct theory.

Only Ricardo himself (ch. 21) and his school postulate altogether too unconditionally that their wants would always coincide with the minimum of maintenance or support. Thus, for instance, J. S. Mill, Principles, IV, ch. 3, 4. However, Mill instead of Ricardo's "wages" employs the better expression, "cost of labor." Senior teaches that the distribution of the aggregate result between laborers and capitalists depends on the anterior course of both classes: on the value of the capital previously employed by capitalists to produce the means of satisfying working men's wants, and on the number of workmen which the previous laboring population have brought into existence. (Outlines, 188 ff.) Concerning von Thünen's vain attempt at a general formula, see supra, § 173. Fourier's idea that 5/12[TN 19] of the product should be distributed among labor, 3/12 among talent, and 4/12 among capital, is entirely baseless. (N. Monde, 309 ff.) Considérant, Destinée sociale, 192 ff. As early a writer as H. Boden, Fürstliche Machtkunst, 1700 and 1740, 42, came strikingly near the truth. According to him, a low rate of interest is produced by four circumstances: surplus capital, a dearth of landed estates, a want of credit and exact justice, and lastly, the heavy taxation of capital.