man. He must not only possess a capital adequate to maintain himself and his family until his shoes can be brought to market, but he must also be able to provide himself with a workshop and tools, to advance money to the tanner to pay his leather, &c. &c. If he did not, exclusive of the ordinary wages of labour, realize a rate of profit on this capital equal to what was obtained by the master shoemaker, he would lend it to him, and work on his account; and it is obvious he could not realize a greater rate of profit, because his shoes could not be sold at a higher price than those manufactured by the capitalist. In this way, the profits of stock constitute a component part of the value of every commodity; but that value is not, as we shall afterwards show, at all influenced by the circumstance of the rate of profit being high or low; it depends entirely on the total quantity of labour required to bring the commodity to market.

The distribution of the labour necessary to the production of a commodity among several hands, can, in like manner, make no alteration on this result.

In estimating,' says Mr Ricardo, the exchangeable value of stockings, we shall find that their value, comparatively with other things, depends on the total quantity of labour necessary to manufacture them, and to bring them to market. First, there is the labour necessary to cultivate the land on which the raw cotton is grown; secondly, the labour of conveying the cotton to the country where the stockings are to be manufactured, which includes a portion of the labour bestowed in building the ship in which it is conveyed, and which is charged in the freight of the goods; thirdly, the labour of the spinner and weaver; fourthly, a portion of the labour of the engineer, smith, and carpenter, who erected the buildings and machinery by the help of which they are made; fifthly, the labour of the retail dealer and many others, whom it is unnecessary further to particularize. The aggregate sum of these various kinds of labour, determines the quantity of other things for which these stockings will exchange, while the same consideration of the various quantities of labour which have been bestowed on those other things, will equally govern the portion of them which will be given for the other.

• To convince ourselves,' continues Mr Ricardo,' that this is the real foundation of exchangeable value, let us suppose any improvement to be made in the means of abridging labour in any one of the various processes through which the raw cotton must pass, before the manufactured stockings come to the market, to be exchanged for other things; and observe the effects which will follow. If fewer men were required to cultivate the raw cotton, or if fewer sailors were employed in navigating, or shipwrights in constructing the ship in

which it was conveyed to us; if fewer hands were employed in raising the buildings and machinery, or if these, when raised, were rendered more efficient, the stockings would inevitably fall in value, and, consequently, command less of other things. They would fall, because a less quantity of labour was necessary to their production; and would therefore exchange for a smaller quantity of those things in which no such abridgment of labour had been made.

Important, however, as this principle unquestionably is, the consequences to which it leads are still more so. Nothing in the whole science of political economy was reckoned better established, than that a rise or a fall of the rate of wages was attended by a proportionable increase or diminution of the price of commodities. But if the exchangeable value of a commodity is not increased, except by an increase of the quantity of labour necessary for its production, this cannot possibly be the case. In such circumstances, its value will not be augmented by an enhancement of the rate of wages.

Thus, supposing the value of money to be invariable, and the quantity of labour necessary to produce 1000l. worth of gloves to remain the same, the gloves would continue to sell for that sum, whether the wages actually paid to the manufacturer amounted to 500l., to 800l., or to 900l. Commodities, in short, would continue to sell after the rise of wages, for the very same price as before, but the proceeds would be differently divided :A greater share would belong to the labourer, and a less to the capitalist; or, what is the same thing, the profits of stock would be diminished.

In order to illustrate this proposition, we may be allowed to make a supposition, which, although it can never actually take place, will serve to set our doctrine in a clearer point of view. Should the quantities of labour necessary to bring every different species of commodities to market be increased in exactly the same relative proportions, their comparative exchangeable value would remain unaltered; while their real price would, however, be augmented. A bushel of corn would not then exchange for a greater quantity of muslins, or of broad cloth, than it did before the increased expense of its production; but it would represent a greater quantity of labour. In such circumstances, although the prices of commodities would remain stationary, the wealth and comforts of the whole society would be diminished. Every person would have to make greater exertions to obtain a certain proportion of any one commodity; but, as the expense of producing all commodities had been equally increased, it would not be necessary to make greater exertions to obtain one particular species than

another.

But, if a general and proportionable increase in the cost of producing commodities would not alter their relative values to one another, how is that to be effected by a general and proportionable rise of wages? The thing is obviously impossible. If a beaver exchanged for a deer, when wages were at 1s. per diem, it must do the same thing when they are universally increased to 10s. or 20s. The market price of the beaver and of the deer would remain unchanged; but, after wages had been increased, a greater share of that price would belong to the labourer, and a less to the capitalist than previously. The real price of commodities would, it is obvious, not be in the least affected by this increase of wages. The quantity of labour necessary to their production would not be increased; and it would, therefore, be equally easy to obtain them.

We believe we may now leave this part of our subject. But, as the doctrine, that a rise of wages is constantly followed by an increase of prices, has been so very generally entertained, we shall subjoin the following observations of Mr Ricardo, which set the truth of his theory in a new and striking point of view.

To say that commodities are raised in price, is the same thing as to say, that money is lowered in relative value; for it is by commodities that the relative value of gold is estimated. If, then, all commodities rose in price, gold could not come from abroad to purchase those dear commodities, but it would go from kome to be employed with advantage in purchasing the comparatively cheaper foreign commodities. It appears, then, that the rise of wages will not raise the prices of commodities, whether the metal from which money is made be produced at home or in a foreign country. All commodities cannot rise at the same time, without an addition to the quantity of money. To purchase any additional quantity of gold from abroad, commodities must be cheap, and not dear. The importation of gold, and a rise in the price of all home-made commodities, by which gold is purchased or paid for, are effects absolutely incompatible. The extensive use of paper money does not alter this question; for paper money conforms, or ought to conform, to the value of gold; and, therefore, its value is influenced by such causes only as influence the value of that metal.'

The universally received opinions respecting the effect of a rise of wages on the price of commodities, have obviously originated in confounding a rise in the money price of wages with a rise in their real price. Every inference, however, as to the rate of wages at particular periods, not deduced from an investigation clearly distinguishing whether the exchangeable value of money had remained unaltered, must be essentially erroneous. The money wages of labour may be raised from 1s.

2s. or 3s. per diem; and yet the real wages of the labourer,

that is, his share of the produce of his labour, may be diminished. This has been actually the case in Britain during the last twenty-five years. Money wages were, in 1810, double of what they had been in 1790; but, as the exchangeable value of our currency had been more than proportionably reduced, the nominal price of commodities rose still faster than wages, and the condition of the labouring classes was altered very much to the worse. In such cases, to ascribe the rise of prices to the rise of wages, would be evidently absurd: In no case, however, will it be found, that a real rise of wages, unaccompanied with a fall in the value of money, was ever followed by a rise in the price of commodities.

But this is not all.-Although the exchangeable value of a commodity, or its real price, is in no case whatever increased by an increase in the rate of wages, it may, and in very many cases actually is, thereby reduced in its real price, or has its exchangeable value diminished.

It will not be difficult to establish this seemingly paradoxical conclusion. Suppose the twenty pairs of stockings, which exchanged for the forty pairs of gloves, to have been wholly or partially the produce of machinery, and the gloves of manual labour, it is clear, that when wages rose, the stocking manufacturer must either reduce the price of his stockings, or get more than the common and ordinary profits of stock. Not having any increase of wages to pay for that part of the work performed by machinery, and, of course, being so far in a better situation than the employers of labourers, whose wages we suppose to have been universally raised, if he did not voluntarily reduce his prices, there would be an influx of capital to his particular department of industry; and as others could furnish themselves with machines at the same price they had cost him, they would soon be so multiplied, that he would unavoidably be obliged to sink the price of his goods, till they afforded only the usual and general rate of profits.

But as capital employed in the great work of production, whether it consist of circulating capital, that is, of capital devoted to the payment of workmen's wages, provisions, raw materials, &c., or of fixed capital, that is, of capital vested in machinery, workhouses, warehouses, &c., must be reproduced from the commodities manufactured, their real price will be more or less affected by a rise of wages, according to the greater or less durability of the capital.

If,' says Mr Ricardo, when profits are at 10 per cent., a certain amount of capital, suppose 20,000l., be employed in supporting productive labour, and be annually consumed and reproduced, as

it is when employed in paying wages; then, to afford this rate of profit on 20,000l., the commodities produced must sell for 22,0007. Now, suppose labour so to rise, that instead of 20,000l. being sufficient to pay the wages of labour, 20,9527. is required; then profits will fall to five per cent.; for as these commodities would sell for no more than before, viz. 22,000l., and to produce them, 20,9521. would be requisite, there would remain no more than 1,048/. of profit on a capital of 20,9521. If labour so rose, that 21,153l. were required, profits would fall to 4 per cent.; and if it rose so that 21,3597. was employed, profits would fall to 3 per cent.'

Now, suppose that a machine is made which can manufacture commodities without any manual labour whatever; and suppose, too, that its value is 20,000l., and that it is fitted to last 100 years-When profits were at 10 per cent., the whole value of the goods produced annually by this machine would be 2000l. 2s. 11d.; for the profit of 20,000l., at 10 per cent., is 20007.; and an annuity of 2s. 11d., accumulating at 10 per cent. will, in 100 years, replace a capital of 20,000l. But as no wages would be paid by the owner of the machine, he would, after a rise of wages had reduced the profits of stock in those departments of industry where the assistance of workmen was required, be obliged, because of the competition of capitalists, to reduce the price of his commodities to such a sum as would yield only the common and ordinary rate of profit, and be sufficient to replace the machine itself at the end of 100 years. Thus, to use the words of Mr Ricardo—

- when profits fell to 5 per cent., the price of his goods must Fall to 10077. 13s. 8d., viz. 1000l. to pay his profits, and 77. 13s. Sd. to accumulate for 100 years at 5 per cent., to replace his capital of 20,000l. When profits fell to 4 per cent., his goods must sell for 816. 3s. 2d.; and, when at 3 per cent., for 6321. 16s. 7d. By a rise in the price of labour, then, under 7 per cent., or, what is the same thing, by a fall of profits to that extent, which has no effect on the price of commodities wholly produced by labour, a fall of no less than 68 per cent. is effected on those commodities wholly produced by machinery calculated to last 100 years.

If this machine were only calculated to last 10 years, the price of the commodities it produced would be less affected by a rise of wages and a fall of profits. On this hypothesis, when profits were at 10 per cent., they would sell for 32541.; when at 5 per cent., for 25904.; when at 4 per cent., for 2465l.; and when at 3 per cent., for 23447.; for such are the sums requisite to place the profits of the proprietor of the machine on a par with others, and to replace the machine itself at the expiration of 10 years. If the machine would last only 5, 4, 3, &c. years, prices would be proportionably less affected by a rise of wages.