My stay in London will not be prolonged beyond Friday next. I hope it
will be convenient to you to come up before. On Thursday I shall be
disengaged and will meet you at any place in London that may best suit
you, unless you will dine with me at my brother's at Bow. His house is
small, and I fear he has not, now we are with him, a spare bed to offer,
and you may not like to travel so far at night. If so, let us meet in
the city and get our dinner there.
The money wages of labour are, I apprehend, generally regulated by
facility of production. With an abundant production too I think that a
less proportion of the whole will be given to the landlords, and more
will remain for the other two classes, of capitalists and labourers; but
of this increased quantity a greater proportion will be given to
capitalists and a less proportion to labourers. Now, though what you
call the real wages of labour[140] (but which I think a wrong term) will
increase, the money wages will fall. But this will not be the case with
profits; what you would call real profits would increase, but so would
also money profits. Under the circumstances then that I have supposed,
the rate of profits would rise though money wages would fall. The
difference between us is this. I say that with every facility or
difficulty of production, of the quantity of necessaries, that is to be
divided between profits and wages, different proportions will be given
to each, and that money will accurately show those proportions. You
appear to me to think that profits do not depend on the division of the
produce, and that money wages may as often rise with facility of
production as fall.
You state the real question fairly; it is, 'What is the main cause which
determines the rate of profits under all the varying degrees of
productiveness?' You do not appear to me [to] solve the question when
you answer 'that it is the proportion which capital bears to labour.' In
a rich country where profits are low, and where a great portion of
produce is paid to the landlords for rent, the proportion of labour to
capital will be the greatest, and yet according to your theory it should
be the least. You will not, I think, deny that in a country where labour
is high a manufacturer would employ more capital to produce the same
commodities than what he would do in a country where wages were low, and
there also would profits be low; that is to say, profits are high where
capital bears a large proportion to labour, and low where labour bears a
large proportion to capital.
I am writing amidst the noise of the Stock Exchange, and very much fear
that I shall be more than usually incomprehensible.
Ever yours,
DAVID RICARDO.