Part 19 (1/2)
I hope it will be for a longer time than you mention. I am desired by Mrs. Ricardo to say that it would give her great pleasure to see Mrs.
Malthus and your three children.... There is a coach which leaves London three times a week at five o'clock in the evening, on Monday, Wednesday, and Friday. This coach goes to Minchinhampton, one mile from our house; it carries four inside, travels at a very good pace, and sets off from the Angel Inn, St. Martin's-le-Grand. There is also a morning coach which goes from Gerard's Hall, Basing Lane, Cheapside, three times a week in the morning at a quarter before six. I believe this coach goes on Tuesday, Thursday, and Sat.u.r.day; it is a Stroud coach and does not come nearer to our house than within four miles on the Cirencester Road.
If you prefer this coach, we will send for you to the place where the roads diverge. This is of course in case Mrs. Malthus does not accompany you....
It is true the case[236] in my book is stated to be temporary, and in my opinion it can only be temporary because it cannot exist when the population has increased with the demand for people. When we meet we must agree upon the meaning to be attached to 'a neat surplus from the land'; it may mean the whole material produce after deducting from it what is absolutely necessary to feed the men who obtained it, or it may mean the value of the produce which falls to the share of the capitalist, or to the share of the capitalist and landlord together. If the first be neat surplus it is equally so whether given to labourers, capitalists, or landlords. If the second it may fall short of giving as great a value to the capitalist as he expended in obtaining it, and therefore for him there would be no neat produce. This term neat produce is used ambiguously in your book, and is made the ground of an observation on something [which I s]aid about neat and gross produce.
The observation is [just] or not just, according to the meaning attached to the term neat produce; but more of this when we meet.
Knowing as I do how much we are influenced by taking a particular view of a subject, and how difficult it is to destroy a train of ideas which have long followed each other in the mind, I will not say I am right about the effects of unproductive demand, and therefore it is possible that five years hence I may think as you do on the subject, but at present I do not see the least probability of such a change, for every renewed consideration of the question confirms me in the opinion which I have long held.
Ever truly yours, DAVID RICARDO.
NOTE.--On the 8th May, 1821, Ricardo writes to J. B. Say from London (Say, Oeuvres Diverses, p. 416), acknowledging receipt of Say's 'Letters to Malthus,' and sending him an early copy of the 3rd edition of his 'Pol. Econ. and Tax.' He finds fault again with Say's use of the word Value. He adopts Say's doctrine of 'productive services'; but 'rent being the effect and not the cause of the rise of prices, I submit afresh to you the question whether it is not well to leave rent out of account when we are estimating the comparative value of the productions of the soil. Suppose that I have before me two loaves, the one from the best land in the country, a land yielding three or four pounds sterling per acre, the other from a land rented at about three or four s.h.i.+llings. The two are precisely of the same quality and the same price. You would say that the price of the one is largely a payment for the service of the soil, while it gives little profit for the capital and the labour that have made that land produce. This is incontestable; but what consequence can you draw from it for our practical guidance?
What we want to know is the general law which regulates the value of bread relatively to the value of all other things; and I believe that we shall find that one of those loaves, the one that comes from the land that pays little or no rent, determines the value of the whole of the bread; consequently its value, compared with that of all other things, depends on the quant.i.ty of labour employed in its production, comparatively with the quant.i.ty of labour employed in every other production. Your book (the Traite) would have gained much if you had considered the laws of rent and profits more deeply: 'Adam Smith was certainly wrong in supposing that the rate of profits depends on the amount of acc.u.mulated capitals without regard to the population, and the means of providing for it.' In other points I agree with your book and with the greater part of your 'Letters to Malthus.' 'Mr. Malthus and I see each other frequently, without convincing one another. I am glad to be able to inform you that economical science is more and more studied by the youth of this country. We have recently formed a club of political economists, in which we are proud to include Messrs. Torrens, Malthus, and Mill. Many others besides are actively maintaining the principles of free trade, though their names are not so well known to the public.'
In his reply (Paris, 19th July, 1821) Say points out that Ricardo neglects the distinction between 'natural wealth' and 'social wealth,' or he would agree more than he does with Say in his view of value. 'Value in use,' if it means anything, means utility pure and simple, and we may leave out the 'value.' But utility may be gratuitously presented to us by nature, or added by our labour and outlay. We measure the new utility thus added, not as you say by the _quant.i.ty of labour_ it costs us, but by the different _quant.i.ties of another product_ which are given for it (for the new utility not for the nature-given utility) by others. For instance, a pound of iron is perhaps 2000 times less valuable than a pound of gold, though the utility of the iron may be equal, if not superior, to that of the gold; and the reason is that nearly all the utility of the iron is a gratuitous gift of nature to us. I neglect, therefore, the distinction of value in use and value in exchange deliberately, for I think Political Economy has to do only with the latter. As to the two loaves, the phenomenon you speak of is due, first, to the appropriation of land, apart from which such produce of the soil as was got without labour would cost nothing to anybody,--second, taking things as they are, to the fact that progress in production essentially consists in the subst.i.tution of nature's gratuitous services for our own costly ones--our ideal being the complete displacement of the latter by the former, which would make us all 'richer than David Ricardo.' Again, I consider that the determining causes of value include the causes that influence demand as well as supply, the cost to the demander of the productive services he offers in exchange, and not only the cost in labour of the article supplied. I am glad to hear of your Club.
'What I desire above all is that such economical principles as are not abstract, but are only the frank exposition of facts and their consequences, should be diffused among all cla.s.ses of citizens. We have need not of controversialists expert in syllogistic weapons, but of practical economists; and all that is wanted, for that, is notions accessible to plain common sense, which I fear we repel by our too abstract reasonings.' If you admit strangers, I should be glad to be a member. He adds in a postscript that his eulogies (in the letters to Malthus) of the Essay on Population have been taken by some English writers as ironical; and he would like Ricardo to tell Malthus this is not so; he considers the position of the Essay impregnable, and has a genuine esteem for the author (Oeuvres Diverses, pp. 418-22). Say was of opinion that the time had not yet come for setting up a dogmatic orthodoxy in economical doctrines; and he begins the above letter by saying to Ricardo:--'I see in your book a new proof that the subjects of political economy are prodigiously complicated, for, though you and I are both seeking the truth in good faith, yet after devoting whole years to sounding the depths of its fundamental questions we find several points on which we do not agree. It is well we are agreed on the essential point, the possibility of the progress of man in wealth and happiness, as well as on the means needful to that end. We reach the same conclusions, though sometimes in different ways' (p. 418).
LXXVI[237].
[Addressed to St. Catherine's, Bath.]
GATCOMB PARK, MINCHINHAMPTON, _9 July, 1821_.
MY DEAR SIR,
I am sorry that you will not spare me a few days before you return to London. Pray reconsider your determination, and, if you can alter it, do. On Sat.u.r.day I expect Mr. Tooke; it is a long time since he fixed on that day to come to me, and I am sure the pleasure of his visit will be much increased, both to him and to me, if you also formed one of our party.
McCulloch has specifically and strongly objected to my chapter on Machinery[238]; he thinks I have ruined my book by admitting it, and have done a serious injury to the science, both by the opinions which I avow, and by the manner I have avowed them[239]. Two or three letters have pa.s.sed between us on this subject; in his last, he appears to me to acknowledge that the effect of the use of machinery may be to diminish the annual quant.i.ty and value of gross produce. In yielding this, he gives up the question, for it is impossible to contend that with a diminished quant.i.ty of gross produce there would be the same means of employing labour. The truth of my propositions on this subject appear to me absolutely demonstrable. McCulloch is lamenting over the departure from my plan of currency, and means to make it the subject of an article in the Edinburgh Review, as he has already done in the Scotsman. I very much regret that in the great change we have made from an unregulated currency to one regulated by a fixed standard we had not more able men to manage it than the present Bank directors. If their object had been to make the revulsion as oppressive as possible, they could not have pursued measures more calculated to make it so than those which they have actually pursued. Almost the whole of the pressure has arisen from the increased value which their operations have given to the standard itself. They are indeed a very ignorant set.
You are right in supposing that I have understood you in your book not to profess to enquire into the motives for producing, but into the effects which would result from abundant production. You say in your letter--'We see in almost every part of the world vast powers of production which are not put into action, and I explain this phenomenon by saying that from the want of the proper distribution of the actual produce adequate motives are not furnished to continued production.' If this had been what I conceived you to have said, I should not have a word to say against you; but I have rather understood you to say that vast powers of production are put into action and the result is unfavourable to the interests of mankind; and you have suggested as a remedy either that less should be produced or more should be unproductively consumed. If you had said 'After arriving at a certain limit, there will in the actual circ.u.mstances be no use to try to produce more; the end cannot be accomplished, and, if it could, instead of more, less would belong to the cla.s.s which provided the capital,' I should have agreed with you; yet in that case I should say the real cause of this faulty distribution would be to be found in the inadequate quant.i.ty of labour in the market, and would be effectually cured by an additional supply of it. But I say with you there could be no adequate motive to push production to this length, and therefore it would never go so far. I do not know whether I am correct in my observation that 'I say so with you,' for you often appear to me to contend not only that production can go on so far without an adequate motive, but that it actually has done so lately, and that we are now suffering the consequences of it in stagnation of trade, in a want of employment for our labourers, etc., etc.; and the remedy you propose is an increase of consumption. It is against this latter doctrine that I protest, and give my decided opposition. I acknowledge there may not be adequate motives for production, and therefore things will not be produced; but I cannot allow first that with these inadequate motives commodities will be produced, and secondly that, if their production is attended with loss to the producer, it is for any other reason than because too great a proportion is given to the labourers employed. Increase their number and the evil is remedied. Let the employer consume more himself and there will be no diminution of demand for labour; but the pay of the labourer, which was before extravagantly high, will be reduced. You say in your letter, 'If an increased power of production be not accompanied by an increase of unproductive expenditure, it will inevitably lower profits and throw labourers out of employment.' In this proposition I do not wholly agree. First I say it must be accompanied with an increase either of productive or of unproductive expenditure. If the labourer receives a large proportion of the produce as wages, all that he receives more than is sufficient to prompt him to the necessary exertions of his powers, is as much unproductive consumption as if it were consumed by his master, or by the State; there is no difference whatever. A master manufacturer might be so extravagant in his expenditure, or might pay so much in taxes, that his capital might be deteriorated for many years together; his situation would be the same if, from his own will or from the inadequacy of the population, he paid so much to his labourers as to leave himself without adequate profits or without any profits whatever.
From taxation he might not be able to escape, but from this last most unnecessary _unproductive_ expenditure he could and would escape, for he could have the same quant.i.ty of labour with less pay, if he only saved less; his saving would be without an end, and would therefore be absurd.
You perceive then I fully admit more than you ask for; I say that, under these circ.u.mstances, without an increase of unproductive expenditure on the part of the masters profits will fall; but I say this further that even with an increased unproductive consumption and expenditure by the labouring cla.s.ses profits will fall. Diminish this latter unproductive expenditure and profits will again rise; this may be done two ways, either by an increase of hands which will lower wages, and therefore the unproductive expenditure of the labouring cla.s.s, or by an increase of the unproductive expenditure of the employing cla.s.s, which will also lower wages by reducing the demand for labour.
I fear I have been guilty of needless repet.i.tion, but I have really a great wish to show you what the points are on which our difference really exists. I am glad to hear that you are in a pleasant country....
Ever yours, DAVID RICARDO.
LXXVII[240].
[To St. Catherine's, Bath.]
GATCOMB PARK, _21 July, 1821_.