The Queen's defence appears to be going on well; a few more such
evidence [_sic_] as Sir Wm. Gell and I think the Lords cannot pass the
bill; in that case I shall not be called to town, and if you are in this
part of the world at Christmas perhaps we shall see you at Gatcomb.
Warburton is staying at Easton Grey and has paid us a visit of two or
three days with the Smiths; he was very agreeable. He does not speak
quite positively, but I think he is one of my disciples and agrees with
me on some of those points which you most strongly dispute.
I quite agree with you in thinking that M. Say's letters to you are not
very well done. He does not even defend his own doctrine with peculiar
ability, and on some other of the intricate questions, on which he
touches, he appears to me to be very unsatisfactory. He certainly has
not a correct notion of what is meant by value when he contends that a
commodity is valuable in proportion to its utility. This would be true
if buyers only regulated the value of commodities; then indeed we might
expect that all men would be willing to give a price for things in
proportion to the estimation in which they held them; but the fact
appears to me to be that the buyers have the least in the world to do in
regulating price; it is all done by the competition of the sellers, and,
however the buyers might be really willing to give more for iron than
for gold, they could not, because the supply would be regulated by the
cost of production, and therefore gold would inevitably be in the
proportion which it now is to iron, although it probably is by all
mankind considered as the less useful metal.
I think more may be said in defence of his doctrine of services; they
are, I think, the regulators of value, and, if he would give up rent, he
and I should not differ very materially on that subject. In what he says
of services he is quite inconsistent with his other doctrine about
utility. He appears to me to talk very ignorantly of the taxation of
England. In the note, page 101, he concedes too much. The difficulty of
finding employment for capital in the countries you mention proceeds
from the prejudices and obstinacy with which men persevere in their old
employments; they expect daily a change for the better, and therefore
continue to produce commodities for which there is no adequate demand.
With abundance of capital and a low price of labour there cannot fail to
be some employments which would yield good profits; and, if a superior
genius had the arrangement of the capital of the country under his
control[225], he might, in a very little time, make trade as active as
ever. Men err in their production; there is no deficiency of demand. If
I wanted cloth and you cotton goods, it would be great folly in us both,
with a view to an exchange between us, for one of us to produce velvets
and the other wine; we are guilty of some such folly now, and I can
scarcely account for the length of time that this delusion continues.
After all, the mischief may not be so great as it appears. You have
fairly represented the point at issue between us;--I cannot conceive it
possible, without the grossest miscalculation, that there should be a
redundancy of capital and of labour at the same time.
When I say mine is the true faith, I mean to express only my strong
conviction that I am right; I hope you do not attach anything like
arrogance to the expression. I am in the habit of asserting my opinion
strongly to you, and I am sure you would not wish me to do otherwise. I
am satisfied that you should do the same by yours, and I dare say you
will agree with me that you are not more inclined to yield to mere
authority without being convinced than I am[226]. I affirm with you that
'if the farmer has no adequate market for his produce, he will soon
cease to distribute more necessaries to his labourers,' with a view to
the production of more necessaries; but will he therefore leave that
part of his capital inactive, will not he or somebody else employ it in
producing something which will meet an adequate market? You speak of the
relative _utility_ of our two definitions of value. I confess that your
definition[227] does not convey to my mind anything approximating to the
idea I have ever formed of value. To say that real value as applied to
wages implies the quantity of necessaries given to the labourer, at the
same time that you agree that those necessaries are as variable as
anything else, appears to me a contradiction. Political Economy you
think is an enquiry into the nature and causes of wealth; I think it
should rather be called an enquiry into the laws which determine the
division of the produce of industry amongst the classes who concur in
its formation. No law can be laid down respecting quantity, but a
tolerably correct one can be laid down respecting proportions. Every day
I am more satisfied that the former enquiry is vain and delusive, and
the latter only the true object of the science. You say that my
proposition, 'that with few exceptions the quantity of labour employed
on commodities determines the rate at which they will exchange for each
other, is not well founded.' I acknowledge that it is not rigidly true,
but I say that it is the nearest approximation to truth, as a rule for
measuring relative value, of any I have ever heard. You say demand and
supply regulates value [_sic_]; this I think is saying nothing, and for
the reason I have given in the beginning of this letter: it is supply
which regulates value[228], and supply is itself controlled by
comparative cost of production. Cost of production, in money, means the
value of labour as well as profits. Now, if my commodity be of equal
value with yours, its cost of production must be the same. But cost of
production is, with some deviations, in proportion to labour employed.
My commodity and your commodity are both worth L1000; they will
therefore probably have the same quantity of labour realized in each.
But the doctrine is less liable to objections when employed not to
measure the whole absolute value of the commodities compared, but the
variations which from time to time take place in relative value. To what
causes, I mean permanent causes, can these variations be attributed? To
two and to two only, one insignificant in its effects, a rise or fall of
wages, or what I think the same thing a fall or rise of profits, the
other of immense importance, the greater or less quantity of labour that
may be required to produce the commodities. From the first cause no
great effects may follow because profits themselves constitute but a
small portion of price, and no great addition or deduction can be made
on their account. To the other cause no very confined limit can be
assigned, for the quantity of labour required to produce commodities may
vary to double or treble.
The subject is difficult, and I am but a poor master of language, and
therefore I shall fail to express what I mean. My first chapter[229]
will not be materially altered; in principle I think it will not be
altered at all....
Ever truly yours,
DAVID RICARDO.