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 Saturday 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 passed 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 quantity and value of gross produce. In yielding this, he
gives up the question, for it is impossible to contend that with a
diminished quantity 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 circumstances 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 class 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
quantity 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 quantity 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 circumstances, 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 classes 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 class, or by an increase of
the unproductive expenditure of the employing class, which will also
lower wages by reducing the demand for labour.
I fear I have been guilty of needless repetition, 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.