' 52 Opinions of Mr. Ricardo and Dr. Adam Smith [4

in various degrees, Rent would appear in the latter at the time that the secondary sort of land was taken into cultivation, while in the former no Rent would be paid until the whole surface of the country were fully occupied and cultivated. Eventually, however, it would yield a much greater Rent than the other, and be capable of supporting a much larger population.

The argument therefore shows that relative fertility is not a necessary condition of Rent, though it serves to explain why the cultivated parts of a country not fully'peopled (such for instance as America) will usually yield some Rent, notwithstanding it may contain large tracts of unappropriated land which are to be had almost for nothing. i '

We cannot then agree with Mr. Malthus that the comparative scarcity of the most fertile soils is one of the causes of Rent; still less with Mr. Ricardo that it is the sole cause.'\ The only necessary conditions of Rent appear to be the absolute fertility of the soil,—the quality noticed by Adam Smith, and the limitation of its quantity. Unless it were capable of producing more than sullicient to maintain those who were employed in cultivating its surface, it is obvious it could never yield the smallest Rent or net produce of any kind. If, on the other hand, it were unlimited in extent, no one would pay for the use of it. It is consequently the fertility of the land combined with its comparative scarcity which gives to its proprietors the enjoyment, as it were, of a species of monopoly by which they are enabled to reserve to themselves a share of its pro

'duce. This share will be greater or less in proportion as_its fer

tility, natural or acquired, is such as to make it yield either much

or little beyond what is sufficient to replace the stock employed '

upon it, together with.its ordinary profits.

But ‘in order. to ascertain what this excess is, we must first know what it is that determines the rate of profit. Now Mr. Ricardo conceived that profits depended on the state of the land, and that

the necessity of resorting to poorer soils as a country increased in

population was the specific cause of their fall, while Adam Smith considered the rate of profits to be determined by the relative

scarcity or abundance of capital compared with the demand for it, .

and the means of employing it.

' If by the expression comparative scarciiy of the most fertile land, is to be

understood its scarcity compared with the demand for its produce and the .

wants of an increasing population, it is undoubtedly in this sense a cause of Rent, but this is not the sense given it by Mr. Ricardo. He has stated Rent to be owing to the inferior fertility of some soils as compared- with pthgrspr to the diminishing returns of successive capitals upon the same an .

That the rate' of profit, however, can never exceed what the fertility of the soil will allow, is a proposition which is almost self-evident. .It is quite clear that the excess of what is produced over and above the maintenance of the cultivators, on the supposition of their share being the smallest possible, is a limit beyond which profits can never pass.

The maximum, then, of profit on the land, including rent, or its total net produce is bounded by the productive power of the soil, and’ if the laborers’ share never varied, this net produce would be always the same on the same land. This however is not the case. Although the average quantity produced may be nearly the same for a considerable length of time, that is, while the produce of a given number of men may vary but little, the share, which goes to the laborer, may vary very considerably. The .worst land cultivated at the present tirrie does not appear, by all accounts, to be inferior in quality to that which was taken into cultivation at the time of the high prices of i810 and 1811, yet during that period it yielded very high profits, while latterly it has yielded but small returns for the capital employed on it; a fact which indisputably proves that the present low rate of profit is not to be attributed to the bad quality of the soil, but entirely to the different distribution of its produce. This indeed is in perfect accordance with Mr. Ricardo’s more general, and as it appears to us, more correct proposition, that profits depend upon the proportion of the whole produce which goes to the laborer. Now applying this rule to the case before us, we shall find that at the earlier period above referred to, a smaller proportion of produce was absorbed by the laborer, and that consequently profits were high, while latterly. a larger proportion has been taken up in the payment of wages, and that consequently profits have been low; the reason of at one time a smaller and at another time a larger share of the produce going to the laborer, being in the one case its scarcity, and in the other its plentifulness compared with the demand for it, or its being at the former period of a higher value or dearer, and_ at the latter of a lower value or cheaper, in the sense in which those terms are usually understood; ‘

After all, then, the proportion between'the demand and supply, which determines the value, is also the regulating principle of

on Political Economy, compared.

' profit, since it determines in all cases the proportion which goes to

the laborer, and Consequently what remains for profit. The culti

Ivation of land too, like every other occupation, is taken up or'

relinquished, because it either will 'or will not yield the average rate of profit as determined by the state of the demand and supply; and in supposing ‘this rate to depend on the quality of the worst Soil in cultivation, Mr. Ricardo seems to have .put the cart before

54 Opinions of Mr. Ricardo and Dr. Adam Smith [6

The separation of rent from profits in the progress ofsopiety will then take place as follows. The cultivable lands of every country being limited in extent, food has a continual tendency to rise, from the increase of population. The rise' in ‘the value of food alters its distribution, reducing the share which goes to the laborer, and augmenting profits; but this extra profit must soon become rent, otherwise agricultural profit would be above the general level, and at the same time that rent is separated, inferior soils which would not before yield the ordinary profit, may' be cultivated with advantage. I If the share which went' to the'

1. laborers never varied nor exceeded what was strictly necessaryi'for'I ' .heir maintenance, Mr. Ricardo’s doctrine would be well-founded, .because in that case the resorting to inferior soils could operate in no other way than in diminishing profits. But it is' found by experience that in the early periods of cultivation, the great plenty’ of food compared with the population, in other words its low. value, gives to the laborer the command of a very large quantity,_ as is the case in America, and the diminution of the laborer’s share, which is occasioned by the gradual rise of 'its value from the con -, tinued increase of population, enables inferior soils'to be cultivated without any fall of profits. It is only when wages are at their . lowest point that the cultivation of worse land is necessarily attended bya fall of profits ; but this is a state of things of which no. country has'as yet furnished us the example, and until we'd'o arrive. at it, we must continue to think with Adam Smith, that it is the ac- \ cumulation of capital beyond the means of employing it'at'the pre- , vious rate of profits, whatever that may be, which is the specific' cause of their fall; and in this view of the subject we' think our great master completely borne out by the well known 'fact, that in ., those periods of our history when accumulation has been either retarded by a war or accelerated by a peace, profits have risen or fallen accordingly. ' ' ' ' . On the subject of wages, Mr. Ricardolseems to have agreed ' ''iwith Adam Smith that they were regulated by the demand and

'supply of capital compared with labor; but he supposed that 'under the same circumstances of fertility they could vary but little, (which we have already shown to be contrary to experience) and that whenever they did so vary, it was owing to the greater or less demand for labor; whereas, according to the principles of Adam Smith, the variation in the quantity of wages is the consequence of the'greater or less abundance of capital and commodities, and not of any alteration in the value of labor itself. That this is really the true state of the case is, we think, suificiently proved by the striking factithat the demand for labor has almost invariably been the greatest whenithelaborer’s share has been the least and vice versa. During the war, 'although wages were 1

mommy high, 'yeto'wirlg tdllhe'fdépi‘eeiated'state of‘ the uneasy; the real quantity‘ of necessaries 'and conveniences which' thelalioi‘ ‘ earned was much'less 'than it was either “previously, 'tir"lia's 'been sinc'eywhile on the other 'hand profits were’very high.. Entrants state of the dlstt'ibut'rdn’gave'to the'wholepl‘odlice of tilei’cduhtr'y >the power of 'putting so 'much labor'into motiom'th'at thpl’flgniaiid for labor'vva's prodigiously increased: .not onlyf.did 'w'omefii and children find. ready employment, but task work'wa's resdrte’d tti )""in~ order to .make up for the want "of hands. Durihg'the 'few first years of peace, when all commodities, without 'scarcely "an except tion, 'fell considerably in value, and consequently a muc.h'largér proportion than before went to the laborers, numbers or" 'them Here thrown out of work for want of the means of employment. nd indeed a moment’s reflection will convince us it cannot be otherwise. When a cake is cut up into a few small'slices, the number'of partakers cannot be so great as when it is divide'd'into a larger number of 'small ones. In like. manner it mis impossible that the demand for labor can increase, when the means 6'? e'mL playing it are diminished; and this must necessarily happen when’.

ever the same ’or a' larger quantity of produce is divided 'among 'a .

smaller number of individuals-a case which is'of 'frequent’bd burrence. It is not uncommon to see agricultural laborers thrown out of employment by an excessively 'abundant harvest. "The Farmers not being indemnified by quantity for the fall 'in the some of their corn, cannot put so much labor into motion as before’, Ind they are consequently under the necessity of reducing the aumber of their hands, while the main article of the laborer’s sub-. sistence is cheaper than ever.‘ When this state of things is not :onfined to a few commodities, b’utexten'ds itself to nearly the whole mass of them, it is called a >general.>_glut__or stagnation, the :xistence of which the school of Mr. Ricardo denies, because it is nexplicable on their principles.2 Its occurrence may indeed be a

' This curious and important fact of quantity and value not varying in the lrart inverse ratio of each other, has not been so much dwelt on by P0ll-' lcal Economists as it deserves to be. It has been recently brought here into notice by Mr. Tooke in his valuable work on “ fllgh and Low ‘rices!’ But he has fallen into the common error of supposing that when .fall takes place in the value of a commodity so as to reduce it below its ost, the consumers gain as much as the producers lose. This is no doubt he case as to quantity, but not as it respects value and the means of emloying labor. It is therefore sure to occasion distress, first, among the reducers themselves, and finally among the laborers, some of whom must is thrown out of employment. _ _ _ _

'1 The ground on which M. Say and Mr. Mill deny the possibility of_a neral glut is, that the excess of'one or more commodities implies, in eir opinion, a. corresponding deficiency of others. But surely these (lisished writers have totally misapprehended the nature of that species superabnndance which is usually termed a glut. It does not consist, as

56 Opinions of Mr. Ricardo and Dr. Adam Smith [8

matter of surprise, for it might be thought that the competition of those who are thrown out of employment would lower wages and enable all to have a share as before. But this we know by experience is not the case 5_ and that it should not be, may appear less. extraordinary, when it is considered that the quantity of _ every commodity which is absorbed in wages is never practically ascerrained till the commodity itself is brought to market ; and the inability of the laborer to alter the distribution, which depends entirely on the state of the demand and the supply, fully confirms Adam Smith’s doctrine, that it is the commodities themselves‘ which vary in their value, and not the labor for which they are. exchanged. _ _ _

It appears, too, that the COHL'llllOr.l of the laborer 15 by no means improved in proportion to the increase in the quantity of his wages. When he receives much in exchange for his labor, he. must in his turn part with much, in order to purchase the labor; of others. In those countries where corn is cheap and plentiful, the surplus in_the laborer’s bands will go but a little way towards procuring him the other requisites of clothing and lodging 01 which he stands in need 5 and when, owing to the abundance 0. capital and commodities, every thing is cheap and plentiful, the laboring class are not in so florishing a condition as might at. first be supposed, owing to the slack demand for labor, which is the necessary 'result of that peculiar state of the distribution. On the other hand, when profits are high, and the laborer’s proportioq less, he and his family get full employment, and on the whole they frequently earn more. > t they imagine it does, in certain commodities being produced in an undut proportion relatively to others, but in their being produced in such abun dance, that the laborer absorbs nearly the whole of them, or so large 1 portion as reduces the profit on them considerably below its natural rate The proportion of each and everycommodity, which goes to the laborer has nothing whatever to do with the existence of any other 'commodity it the market. If the rate of profit be ten per cent., and that cottons are st abundant as to yield only two per cent. profit, it is not by producing mot ofcofi'ee, or sugar, or corn, or iron, or of any other commodity, that w can raise the rate of profit on cotton. To multiply these commodities woul indeed increase the laborer’s share of them, but could not in the slightet degree afi'ect the ratio between labor and cotton. Their increased quantit would therefore only lower their value, and they would create no greats effective demand for the cotton than before such increase took place. Th. only way in which cottons could be made to risein value, would be h diminishing the supply ofthem or'hy employing a larger portion of tli national revenue in the purchase of them, to the cxtlusion ot'snmethin ‘else, Now this being the case, it is obvious that a glut of all comtnoditit is Just asdposstble, as the glut of any single one; for though they may t multlplie in such proportions as not to vary in their relative value, the

ma be all so abundant as scarcely to be worth the labor they have cost

an this is what is meant by a general glut.