to the 'thought of ten millions of people condemned to incessant toil, and to the privation of everything but absolute necessaries, in order to minister to the excessive luxuries of the other million.' But he denies that any such necessity exists. He wishes precisely to see luxury spread among the poorer classes. A desire for such luxury is the best of all checks to population, and one of the best means of raising the standard. It would, in fact, contribute to his 'moral restraint.' So, too, he heartily condemns the hypocrisy of the rich, who professed a benevolent desire to better the poor, and yet complained of high wages.[248] If, he says elsewhere,[249] a country can 'only be rich by running a successful race for low wages, I should be disposed to say, Perish such riches!' No one, in fact, could see more distinctly than Malthus the demoralising influence of poverty, and the surpassing importance of raising the people from the terrible gulf of pauperism. He refers to Colquhoun's account of the twenty thousand people who rose every morning in London without knowing how they were to be supported; and observes that 'when indigence does not produce overt acts of vice, it palsies every virtue.'[250] The temptations to which the poor man is exposed, and the sense of injustice due to an ignorance of the true cause of misery, tend to 'sour the disposition, to harden the heart, and deaden the moral sense.' Unfortunately, the means which have been adopted to lessen the evil have tended to increase it. In the first place, there was the master-evil of the poor-laws. Malthus points out the demoralising effects of these laws in chapters full of admirable common sense, which he was unfortunately able to enforce by fresh illustrations in successive editions. He attends simply to the stimulus to population. He thinks that if the laws had never existed, the poor would now have been much better off.[251] If the laws had been fully carried out, every labourer might have been certain that all his children would be supported, or, in other words, every check to population would have been removed.[252] Happily, the becoming pride of the English peasantry was not quite extinct; and the poor-law had to some extent counteracted itself, or taken away with one hand what it gave with the other, by placing the burthen upon the parishes.[253] Thus landlords have been more disposed to pull down than to build cottages, and marriage has been checked. On the whole, however, Malthus could see in the poor-laws nothing but a vast agency for demoralising the poor, tempered by a system of petty tyrannical interference. He proposes, therefore, that the poor-law should be abolished. Notice should be given that no children born after a certain day should be entitled to parish help; and, as he quaintly suggests, the clergyman might explain to every couple, after publishing the banns, the immorality of reckless marriage, and the reasons for abolishing a system which had been proved to frustrate the intentions of the founders.[254] Private charity, he thinks, would meet the distress which might afterwards arise, though humanity imperiously requires that it should be 'sparingly administered.' Upon this duty he writes a sensible chapter.[255] To his negative proposals Malthus adds a few of the positive kind. He is strongly in favour of a national system of education, and speaks with contempt of the 'illiberal and feeble' arguments opposed to it. The schools, he observes, might confer 'an almost incalculable benefit' upon society, if they taught 'a few of the simplest principles of political economy.'[256] He had been disheartened by the prejudices of the ignorant labourer, and felt the incompatibility of a free government with such ignorance. A real education, such as was given in Scotland, would make the poor not, as alarmists had suggested, more inflammable, but better able to detect the sophistry of demagogues.[257] He is, of course, in favour of savings banks,[258] and approves friendly societies, though he is strongly opposed to making them compulsory, as they would then be the poor-law in a new form.[259] The value of every improvement turns upon its effect in encouraging the 'moral restraint.' Malthus's ultimate criterion is always, Will the measure make people averse to premature marriage? He reaches the apparently inconsistent result that it might be desirable to make an allowance for every child beyond six.[260] But this is on the hypothesis that the 'moral restraint' has come to be so habitual that no man marries until he has a fair prospect of maintaining a family of six. If this were the practical code, the allowance in cases where the expectation was disappointed would not act as an encouragement to marriage, but as a relief under a burthen which could not have been anticipated. Thus all Malthus's teaching may be said to converge upon this practical point. Add to the Ten Commandments the new law, 'Thou shalt not marry until there is a fair prospect of supporting six children.' Then population will increase, but sufficient means for subsistence will always be provided beforehand. We shall make sure that there is a provision for additional numbers before, not after, we add to our numbers. Food first and population afterwards gives the rule; thus we achieve the good end without the incidental evils.

Malthus's views of the appropriate remedy for social evils undoubtedly show an imperfect appreciation of the great problems involved. Reckless propagation is an evil; but Malthus regards it as an evil which can be isolated and suppressed by simply adding a new article to the moral code. He is dealing with a central problem of human nature and social order. Any modification of the sexual instincts or of the constitution of the family involves a profound modification of the whole social order and of the dominant religious and moral creeds. Malthus tacitly assumes that conduct is determined by the play of two instincts, unalterable in themselves, but capable of modification in their results by a more extensive view of consequences. To change men's ruling motives in regard to the most important part of their lives is to alter their whole aims and conceptions of the world, and of happiness in every other relation. It supposes, therefore, not a mere addition of knowledge, but a transformation of character and an altered view of all the theories which have been embodied in religious and ethical philosophy. He overlooks, too, considerations which would be essential to a complete statement. A population which is too prudent may suffer itself to be crowded out by more prolific races in the general struggle for existence; and cases may be suggested such as that of the American colonies, in which an increase of numbers might be actually an advantage by facilitating a more efficient organisation of labour.

The absence of a distinct appreciation of such difficulties gives to his speculation that one-sided character which alienated his more sentimental contemporaries. It was natural enough in a man who was constantly confronted by the terrible development of pauperism in England, and was too much tempted to assume that the tendency to reckless propagation was not only a very grave evil, but the ultimate source of every evil. The doctrine taken up in this unqualified fashion by some of his disciples, and preached by them with the utmost fervour as the one secret of prosperity, shocked both the conservative and orthodox whose prejudices were trampled upon, and such Radicals as inherited Godwin's or Condorcet's theory of perfectibility. Harsh and one-sided as it might be, however, we may still hold that it was of value, not only in regard to the most pressing difficulty of the day, but also as calling attention to a vitally important condition of social welfare. The question, however, recurs whether, when the doctrine is so qualified as to be admissible, it does not also become a mere truism.

An answer to this question should begin by recognising one specific resemblance between his speculations and Darwin's. Facts, which appear from an older point of view to be proofs of a miraculous interposition, become with Malthus, as with Darwin, the normal results of admitted conditions. Godwin had admitted that there was some 'principle which kept population on a level with subsistence.' 'The sole question is,' says Malthus,[261] 'what is this principle? Is it some obscure and occult cause? a mysterious interference of heaven,' inflicting barrenness at certain periods? or 'a cause open to our researches and within our view?' Other writers had had recourse to the miraculous. One of Malthus's early authorities was Suessmilch, who had published his Goettliche Ordnung in 1761, to show how Providence had taken care that the trees should not grow into the sky. The antediluvians had been made long-lived in order that they might have large families and people an empty earth, while life was divinely shortened as the world filled up. Suessmilch, however, regarded population as still in need of stimulus. Kings might help Providence. A new Trajan would deserve to be called the father of his people, if he increased the marriage-rate. Malthus replies that the statistics which the worthy man himself produced showed conclusively that the marriages depended upon the deaths. The births fill up the vacancies, and the prince who increased the population before vacancies arose would simply increase the rate of mortality.[262] If you want to increase your birth-rate without absolutely producing famine, as he remarks afterwards,[263] make your towns unhealthy, and encourage settlement by marshes. You might thus double the mortality, and we might all marry prematurely without being absolutely starved. His own aim is not to secure the greatest number of births, but to be sure that the greatest number of those born may be supported.[264] The ingenious M. Muret, again, had found a Swiss parish in which the mean life was the highest and the fecundity smallest known. He piously conjectures that it may be a law of God that 'the force of life in each country should be in the inverse ratio of its fecundity.' He needs not betake himself to a miracle, says Malthus.[265] The case is simply that in a small and healthy village, where people had become aware of the importance of the 'preventive check,' the young people put off marriage till there was room for them, and consequently both lowered the birth-rate and raised the average duration of life.

Nothing, says Malthus very forcibly, has caused more errors than the confusion between 'relative and positive, and between cause and effect.'[266] He is here answering the argument that because the poor who had cows were the most industrious, the way to make them industrious was to give them cows. Malthus thinks it more probable that industry got the cow than that the cow produced industry. This is a trifling instance of a very general truth. People had been content to notice the deaths caused by war and disease, and to infer at once that what caused death must diminish population. Malthus shows the necessity of observing other collateral results. The gap may be made so great as to diminish population; but it may be compensated by a more rapid reproduction; or, the rapidity of reproduction may itself be the cause of the disease; so that to remove one kind of mortality may be on some occasion to introduce others. The stream is dammed on one breach to flow more strongly through other outlets.[267]

This is, I conceive, to say simply that Malthus was introducing a really scientific method. The facts taken in the true order became at once intelligible instead of suggesting mysterious and irregular interferences. Earlier writers had been content to single out one particular set of phenomena without attending to its place in the more general and complex processes, of which they formed an integral part. Infanticide, as Hume had pointed out, might tend to increase population.[268] In prospect, it might encourage people to have babies; and when babies came, natural affection might prevent the actual carrying out of the intention. To judge of the actual effect, we have to consider the whole of the concrete case. It may be carried out, as apparently in the South Sea Islands, so generally as to limit population; or it may be, as in China, an indication that the pressure is so great that a number of infants become superfluous. Its suppression might, in the one case, lead to an increase of the population; in the other, to the increase of other forms of mortality. Malthus's investigations illustrate the necessity of referring every particular process to its place in the whole system, of noting how any given change might set up a set of actions and reactions in virtue of the general elasticity of population, and thus of constantly referring at every step to the general conditions of human life. He succeeded in making many points clear, and of showing how hastily many inferences had been drawn. He explained, for example, why the revolutionary wars had not diminished the population of France, in spite of the great number of deaths,[269] and thus gave an example of a sound method of inquiry which has exercised a great influence upon later observers. Malthus was constantly misunderstood and misrepresented, and his opponents often allege as fatal objections to his doctrine the very facts by which it was really supported. But we may, I think, say, that since his writing no serious economical writer has adopted the old hasty guesses, or has ventured to propose a theory without regard to the principles of which he first brought out the full significance.

V. POLITICAL APPLICATION

This I take to indicate one real and permanent value of Malthus's writings. He introduced a new method of approaching the great social problems. The value of the method may remain, however inaccurate may be the assumptions of facts. The 'tendency,' if interpreted to mean that people are always multiplying too rapidly, may be a figment. If it is taken as calling attention to one essential factor in the case, it is a most important guide to investigation. This brings out another vital point. The bearing of the doctrine upon the political as well as upon the economical views of the Utilitarians is of conspicuous importance. Malthus's starting-point, as we have seen, was the opposition to the doctrine of 'perfectibility.' Hard facts, which Godwin and Condorcet had neglected, were fatal to their dreams. You have, urged Malthus, neglected certain undeniable truths as to the unalterable qualities of human nature, and, therefore, your theories will not work. The revolutionists had opposed an ideal 'state of nature' to the actual arrangements of society. They imagined that the 'state of nature' represented the desirable consummation, and that the constitution of the 'natural' order could be determined from certain abstract principles. The equality of man, and the absolute rights which could be inferred by a kind of mathematical process, supplied the necessary dogmatic basis. The antithesis to the state of nature was the artificial state, marked by inequality, and manifesting its spirit by luxury. Kings, priests, and nobles had somehow established this unnatural order; and to sweep them away summarily was the way of bringing the natural order into full activity. The ideal system was already potentially in existence, and would become actual when men's minds were once cleared from superstition, and the political made to correspond to the natural rights of man. To this Malthus had replied, as we have seen, that social inequality was not a mere arbitrary product of fraud and force, but an expedient necessary to restrain the primitive instincts of mankind. He thus coincides with Bentham's preference of 'security' to 'equality,' and illustrates the real significance of that doctrine. Property and marriage, though they involve inequality, were institutions of essential importance. Godwin had pushed his theories to absolute anarchy; to the destruction of all law, for law in general represented coercion or an interference with the state of nature. Malthus virtually asserted that the metaphysical doctrine was inapplicable because, men being what they are, these conclusions were incompatible with even the first stages of social progress. This means, again, that for the metaphysical method Malthus is substituting a scientific method. Instead of regarding all government as a kind of mysterious intervention from without, which has somehow introduced a fatal discord into the natural order, he inquires what are the facts; how law has been evolved; and for what reason. His answer is, in brief, that law, order, and inequality have been absolutely necessary in order to limit tendencies which would otherwise keep men in a state of hopeless poverty and depression.

This gives the 'differentia' of the Utilitarian considered as one species of the genus 'Radical.' Malthus's criticism of Paine is significant.[270] He agrees with Paine that the cause of popular risings is 'want of happiness.' But Paine, he remarks, was 'in many important points totally ignorant of the structure of society'; and has fallen into the error of attributing all want of happiness to government. Consequently, Paine advocates a plan for distributing taxes among the poorest classes, which would aggravate the evils a hundredfold. He fully admits with Paine that man has rights. The true line of answer would be to show what those rights are. To give this answer is not Malthus's present business; but there is one right, at any rate, which a man does not and cannot possess: namely, the 'right to subsistence when his labour will not fairly purchase it.' He does not possess it because he cannot possess it; to try to secure it is to try to 'reverse the laws of nature,' and therefore to produce cruel suffering by practising an 'inhuman deceit.' The Abbe Raynal had said that a man had a right to subsist 'before all social laws.' Man had the same right, replied Malthus, as he had to live a hundred or a thousand years. He may live, if he can without interfering with others. Social laws have, in fact, enlarged the power of subsistence; but neither before nor after their institution could an unlimited number subsist. Briefly, the question of fact comes before the question of right, and the fault of the revolutionary theorists was to settle the right without reference to the possibility of making the right correspond to the fact.

Hence Malthus draws his most emphatic political moral. The admission that all evil is due to government is the way to tyranny. Make men believe that government is the one cause of misery, and they will inevitably throw the whole responsibility upon their rulers; seek for redress by cures which aggravate the disease; and strengthen the hands of those who prefer even despotism to anarchy. This, he intimates, is the explanation of the repressive measures in which the country-gentlemen had supported Pitt. The people had fancied that by destroying government they would make bread cheap; government was forced to be tyrannical in order to resist revolution; while its supporters were led to 'give up some of the most valuable privileges of Englishmen.'[271] It is then of vital importance to settle what is and what is not to be set down to government. Malthus, in fact, holds that the real evils are due to underlying causes which cannot be directly removed, though they may be diminished or increased, by legislators. Government can do something by giving security to property, and by making laws which will raise the self-respect of the lower classes. But the effect of such laws must be slow and gradual; and the error which has most contributed to that delay in the progress of freedom, which is 'so disheartening to every liberal mind,'[272] is the confusion as to the true causes of misery. Thus, as he has already urged, professed economists could still believe, so long after the publication of Adam Smith's work, that it was 'in the power of the justices of the peace or even of the omnipotence of parliament to alter by a fiat the whole circumstances of the country.'[273] Yet men who saw the absurdity of trying to fix the price of provisions were ready to propose to fix the rate of wages. They did not see that one term of the proportion implied the other. Malthus's whole criticism of the poor-law, already noticed, is a commentary upon this text. It is connected with a general theory of human nature. The author of nature, he says, has wisely made 'the passion of self-love beyond expression stronger than the passion of benevolence.'[274] He means, as he explains, that every man has to pursue his own welfare and that of his family as his primary object. Benevolence, of course, is the 'source of our purest and most refined pleasures,' and so forth; but it should come in as a supplement to self-love. Therefore we must never admit that men have a strict right to relief. That is to injure the very essential social force. 'Hard as it may seem in individual instances, dependent poverty ought to be held disgraceful.'[275] The spirit of independence or self-help is the one thing necessary. 'The desire of bettering our condition and the fear of making it worse, like the vis medicatrix in physics, is the vis medicatrix naturae in politics, and is continually counteracting the disorders arising from narrow human institutions.'[276] It is only because the poor-laws have not quite destroyed it, that they have not quite ruined the country. The pith of Malthus's teaching is fairly expressed in his last letter to Senior.[277] He holds that the improvement in the condition of the great mass of the labouring classes should be considered as the main interest of society. To improve their condition, it is essential to impress them with the conviction that they can do much more for themselves than others can do for them, and that the only source of permanent improvement is the improvement of their moral and religious habits. What government can do, therefore, is to maintain such institutions as may strengthen the vis medicatrix, or 'desire to better our condition,' which poor-laws had directly tended to weaken. He maintains in his letter to Senior, that this desire is 'perfectly feeble' compared with the tendency of the population to increase, and operates in a very slight degree upon the great mass of the labouring class.[278] Still, he holds that on the whole the 'preventive checks' have become stronger relatively to the positive,[279] and, at any rate, all proposals must be judged by their tendency to strengthen the preventive.

Malthus was not a thoroughgoing supporter of the 'do-nothing' doctrine. He approved of a national system of education, and of the early factory acts, though only as applied to infant labour. So, as we shall see, did all the Utilitarians. The 'individualism,' however, is not less decided; and leads him to speak as though the elasticity of population were not merely an essential factor in the social problem, but the sole principle from which all solutions must be deduced. He is thus led, as I have tried to show, to a narrow interpretation of his 'moral check.' He is apt to take 'vice' simply as a product of excessive pressure, and, in his general phrases at least, to overlook its reciprocal tendency to cause pressure. The 'moral check' is only preventive or negative, not a positive cause of superior vigour. A similar defect appears in his theory of the vis medicatrix. He was, I hold, perfectly right in emphasising the importance of individual responsibility. No reform can be permanent which does not raise the morality of the individual. His insistence upon this truth was of the highest importance, and it is to be wished that its importance might be more fully recognised to-day. The one-sidedness appears in his proposal to abolish the poor-law simply. That became the most conspicuous and widely accepted doctrine. All men of 'sense,' said Sydney Smith—certainly a qualified representative of the class—in 1820, agree, first, that the poor-law must be abolished; and secondly, that it must be abolished very gradually.[280] That is really to assume that by refusing to help people at all, you will force them to help themselves. There is another alternative, namely, that they may, as Malthus himself often recognises, become demoralised by excessive poverty. To do simply nothing may lead to degeneration instead of increased energy. The possibility of an improved law, which might act as a moral discipline instead of a simply corrupting agency, is simply left out of account; and the tendency to stimulate reckless population is regarded not only as one probable consequence, but as the very essence of all poor-laws. Upon Malthus's assumptions, the statement that sound political and social theories must be based upon systematic inquiry into facts, meant that the individual was the ultimate unalterable unit, whose interest in his own welfare gave the one fulcrum for all possible changes. The ideal 'state of nature' was a fiction. The true basis of our inquiries is the actual man known to us by observation. The main fault of this being was the excess of the instinct of multiplication, and the way to improve him was to show how it might conflict with the instinct of self-preservation. In this shape the doctrine expressed the most characteristic tendency of the Utilitarians, and divided them from the Socialists or believers in abstract rights of man.

VI. RENT

Here, then, we are at a central point of the Utilitarian creed. The expansive force of population is, in a sense, the great motive power which moulds the whole social structure; or, rather, it forces together the independent units, and welds them into an aggregate. The influence of this doctrine upon other economical speculations is of the highest importance. One critical stage in the process is marked by the enunciation of the theory of rent, which was to become another essential article of the true faith. The introduction of this doctrine is characteristic, and marks the point at which Ricardo superseded Malthus as chief expositor of the doctrine.

Malthus's views were first fully given in his Inquiry into Rent, the second of three pamphlets which he published during the corn-law controversy of 1814-15.[281] The opinions now stated had, he says, been formed in the course of his lecturing at Haileybury; and he made them public on account of their bearing upon the most absorbing questions of the time. The connection of the theory with Malthus's speculations and with the contemporary difficulties is indeed obvious. The landlord had clearly one of the reserved seats at the banquet of nature. He was the most obvious embodiment of 'security' as opposed to equality. Malthus, again, had been influenced by the French economists and their theory of the 'surplus fund,' provided by agriculture. According to them, as he says,[282] this fund or rent constitutes the whole national wealth. In his first edition he had defended the economists against some of Adam Smith's criticisms; and though he altered his views and thought that they had been led into preposterous errors, he retained a certain sympathy for them. Agriculture has still a certain 'pre-eminence.' God has bestowed upon the soil the 'inestimable quality of being able to maintain more persons than are necessary to work it.'[283] It has the special virtue that the supply of necessaries generates the demand. Make more luxuries and the price may fall; but grow more food and there will be more people to eat it. This, however, seems to be only another way of stating an unpleasant fact. The blessing of 'fertility' counteracts itself. As he argues in the essay,[284] an equal division of land might produce such an increase of population as would exhaust any conceivable increase of food. These views—not, I think, very clear or consistently worked out—lead apparently to the conclusion that the fertility is indeed a blessing, but on condition of being confined to a few. The result, in any case, is the orthodox theory of rent. The labourer gets less than he would if the products of the soil were equally distributed. Both wages and profits must fall as more is left to rent, and that this actually happens, he says, with unusual positiveness, is an 'incontrovertible truth.'[285] The fall enables the less fertile land to be cultivated, and gives an excess of produce on the more fertile. 'This excess is rent.'[286] He proceeds to expound his doctrine by comparing land to a set of machines for making corn.[287] If, in manufacture, a new machine is introduced every one adopts it. In agriculture the worst machines have still to be used; and those who have the best and sell at the same price, can appropriate the surplus advantage. This, he declares, is a law 'as invariable as the action of the principle of gravity.'[288] Yet Smith and others have overlooked a 'principle of the highest importance'[289] and have failed to see that the price of corn, as of other things, must conform to the cost of production. The same doctrine was expounded in the same year by Sir Edward West;[290] and, as it seems to me, more clearly and simply. West, like Malthus, says that he has to announce a principle overlooked by Adam Smith. This is briefly that 'each equal additional quantity of work bestowed on agriculture yields an actually diminished return.' He holds that profits fall as wealth increases, but he denies Adam Smith's view that this is a simple result of increased competition.[291] Competition would equalise, but would not lower profits, for 'the productive powers of manufactures are constantly increasing.' In agriculture the law is the opposite one of diminishing returns. Hence the admitted fall of profits shows that the necessity of taking inferior soils into cultivation is the true cause of the fall.

Such coincidences as that between Malthus and West are common enough, for very obvious reasons. In this case, I think, there is less room for surprise than usual. The writer generally credited with the discovery of the rent doctrine is James Anderson, who had stated it as early as 1777.[292] The statement, however, did not attract attention until at the time of West and Malthus it was forced upon observers by the most conspicuous facts of the day. Adam Smith and other economists had, as Malthus notices, observed what is obvious enough, that rent in some way represented a 'net produce'—a something which remained after paying the costs of production. So much was obvious to any common-sense observer. In a curious paper of December 1804,[293] Cobbett points out that the landlords will always keep the profits of farmers down to the average rate of equally agreeable businesses. This granted, it is a short though important step to the theory of rent. The English system had, in fact, spontaneously analysed the problem. The landlord, farmer, and labourer represented the three interests which might elsewhere be combined. Prices raised by war and famine had led to the enclosure of wastes and the breaking up of pastures. The 'margin of cultivation' was thus illustrated by facts. Farmers were complaining that they could not make a profit if prices were lowered. The landed classes were profiting by a rise of price raised, according to a familiar law, in greater proportion than the deficiency of the harvest. Facts of this kind were, one must suppose, familiar to every land-agent; and to discover the law of rent, it was only necessary for Malthus and West to put them in their natural order. The egg had only to be put on its end, though that, as we know, is often a difficult task. When the feat was accomplished consequences followed which were fully developed by Ricardo.

FOOTNOTES:

[203] Mr. James Bonar's Malthus and his Work (1885) gives an admirable account of Malthus. The chief original authorities are a life by Bishop Otter, prefixed to a second edition of the Political Economy (1831), and an article by Empson, Malthus's colleague, in the Edinburgh Review for January 1837.

[204] Political Justice (3rd edition, 1798), ii. bk. viii. chap. ix., p. 514.

[205] Wallace wrote in answer to Hume, A Dissertation on the Numbers of Mankind in Ancient and Modern Times (1753), and Various Prospects of Mankind, and Nature and Providence (1761). Godwin refers to the last.

[206] Political Justice, ii. 520.

[207] Ibid. ii. 528.

[208] First published in 1795, after the first edition, as Godwin remarks, of the Political Justice.

[209] Ami des hommes (reprint of 1883), p. 15.

[210] Ami des hommes, p. 26.

[211] See the curious debate in Parl. Hist. xiv. 1318-1365.

[212] The seventh edition of Price's Observations on Reversionary Payments, etc. (1812), contains a correspondence with Pitt (i. 216, etc.). The editor, W. Morgan, accuses Pitt of adopting Price's plans without due acknowledgment and afterwards spoiling them.

[213] Essay on Population, p. 18. In Observations, ii. 141, he estimates the diminution at a million and a half. Other books referring to the same controversy are Howlett's Examination of Dr. Price's Essay (1781); Letter to Lord Carlisle, by William Eden (1744-1814), first Lord Auckland; William Wales's Enquiry into Present State of Population, etc. (1781); and Geo. Chalmers's Estimate of the Comparative Strength of Great Britain (1782 and several later editions).

[214] Essay (first edition), p. 339.

[215] Memoirs, etc. (1819), ii. 10.

[216] So Sir James Stewart, whose light was extinguished by Adam Smith, begins his Enquiry into the Principles of Political Economy (1767) by discussing the question of population, and compares the 'generative faculty' to a spring loaded with a weight, and exerting itself in proportion to the diminution of resistance (Works, 1805, i. 22). He compares population to 'rabbits in a warren.' Joseph Townsend, in his Journey Through Spain (1792), to whom Malthus refers, had discussed the supposed decay of the Spanish population, and illustrates his principles by a geometric progression: see ii. 213-56, 386-91. Eden, in his book on the poor (i. 214), quotes a tract attributed to Sir Matthew Hale for the statement that the poor increase on 'geometrical progression.'

[217] Malthus and his Work, p. 85.

[218] Voltaire says in the Dictionnaire Philosophique (art. 'Population'): 'On ne propage point en Progression Geometrique. Tous les calculs qu'on a faits sur cette pretendue multiplication sont des chimeres absurdes.' They had been used to reconcile the story of the deluge with the admitted population of the world soon afterwards.

[219] Essay (1826), ii 453 n. I cite from this, the last edition published in Malthus's lifetime, unless otherwise stated.

[220] Essay, ii. 251 (bk. iii. ch. xiv.).

[221] Ibid. (1798), p. 141.

[222] Essay, ii. 449 (Appendix).

[223] Essay, ii. 473 (Appendix).

[224] Ibid. (Second Edition), p. 400. The passage is given in full in Malthus and his Work, p. 307.

[225] Essay, i. 469 (bk. ii. ch. x.). Eden had made the same remark.

[226] Ibid. ii. 229 (bk. iii. ch. xiv.).

[227] Correspondence in Senior's Three Essays on Population (1829).

[228] Essay, i. 234 (bk. i. ch. ii.).

[229] Mr. Bonar thinks (Malthus and his Work, p. 324) that Malthus followed Paley's predecessor, Abraham Tucker, rather than Paley. The difference is not for my purpose important. In any case, Malthus's references are to Paley.

[230] Essay, ii. 266 (bk. iv. ch. i.).

[231] Essay (first edition), p. 212.

[232] Ibid. i. 16 n. (bk. i. ch. ii.).

[233] See e.g. his remarks upon Condorcet in Essay, ii. 8 (bk. iii. ch. i.); and Owen in Ibid. ii. 48 (bk. iii ch. ii.).

[234] Essay, i. 15 n. (bk. i. ch. ii.); and see Ibid. (edit. of 1807) ii. 128.

[235] Ibid. (1807) ii. 128.

[236] Ibid. (1807) ii. 3 (bk. ii. ch. ii.). (Omitted in later editions.)

[237] Mr. A. R. Wallace, Darwin's fellow-discoverer of the doctrine, also learned it from Malthus. See Clodd's Pioneers of Evolution. Malthus uses the phrase 'struggle for existence' in relation to a fight between two savage tribes in the first edition of his Essay, p. 48. In replying to Condorcet, Malthus speaks (Essay, ii. 12, bk. iii. ch. i.) of the possible improvement of living organisms. He argues that, though a plant may be improved, it cannot be indefinitely improved by cultivation. A carnation could not be made as large as a tulip. It has been said that this implies a condemnation by anticipation of theories of the development of species. This is hardly correct. Malthus simply urges against Condorcet that our inability to fix limits precisely does not imply that there are no limits. This, it would seem, must be admitted on all hands. Evolution implies definite though not precisely definable limits. Life may be lengthened, but not made immortal.

[238] Essay (first edition), 353.

[239] Ibid. 42 n. (bk. iii. ch. iii.)

[240] Essay, ii. 301-36 (bk. iv. ch. i. and ii.). Sumner's Treatise on the Records of the Creation, and on the Moral Attributes of the Creator: with Particular Reference to the Jewish History and the Consistency of the Principle of Population with the Wisdom and Goodness of the Creator (1815), had gained the second Burnett prize. It went through many editions; and shows how Cuvier confirms Genesis, and Malthus proves that the world was intended to involve a competition favourable to the industrious and sober. Sumner's view of Malthus is given in Part ii., chaps, v. and vi. In previous chapters he has supported Malthus's attack on Godwin and Condorcet.

[241] Essay, ii. 266 (bk. iv. ch. i.).

[242] Essay, ii 268 (bk. iv. ch. i.).

[243] Ibid. (bk. iv. ch. ii.).

[244] Essay, 241 (bk. iii. ch. iv.).

[245] Ibid. ii. 241 (bk. iii. ch. xiv.).

[246] Ibid. ii. 293 (bk. iv. ch. iv.).

[247] Ibid. ii. 425 (bk. iv. ch. xiii.). Malthus expresses a hope that Paley had modified his views upon population, and refers to a passage in the Natural Theology.

[248] Essay, ii. 292 (bk. iv. ch. iv.).

[249] Political Economy (1836), p. 214.

[250] Essay, ii. 298 (bk. iv. ch. iv.).

[251] Ibid. ii. 86 (bk. iii. ch. vi.).

[252] Ibid. ii. 87 (bk. iii. ch. vi.).

[253] Essay, ii. 90 (bk. iii. ch. vi.).

[254] Ibid. ii. 338 (bk. iv. ch. viii.).

[255] Ibid. ii. (bk. iv. ch. x.).

[256] Ibid. ii. 353 (bk. iv. ch. ix.).

[257] Essay, ii. 356 (bk. iv. ch. ix.).

[258] Ibid. ii. 407 (bk. iv. ch. xii.).

[259] Ibid. ii. 375 (bk. iv. ch. xi.).

[260] Ibid. ii. 429 (bk. iv. ch. xiii.).

[261] Essay of 1807 (bk. iii. ch. ii., and vol. ii. p. 111). The phrases quoted are toned down in later editions.

[262] Essay, i. 330 (bk. ii. ch. iv.).

[263] Ibid. ii. 300 (bk. iv. ch. v.).

[264] Ibid. ii. 405 (bk. iv. ch. xiii.).

[265] Ibid. i. 343 (bk. ii. ch. v.).

[266] Essay, ii. 424 (bk. iv. ch. xiii.).

[267] Ibid. ii. 304 (bk. iv. ch. v.).

[268] Essay, i. 75 (bk. i. ch. v.).

[269] Ibid. (bk. ii. ch. vi.).

[270] Essay, ii. 318 (bk. iv. ch. vi.).

[271] Essay, ii. 315 (bk. iv. ch. v.).

[272] Ibid. ii. 326 (bk. iv. ch. vi.).

[273] Ibid. ii. 78 (bk. iii. ch. v.).

[274] Essay, ii. 454 (Appendix).

[275] Ibid. ii. 82 (bk. iii. ch. vi.).

[276] Ibid. ii. 90 (bk. iii. ch. vi.).

[277] Senior's Three Lectures, p. 86.

[278] Senior's Three Lectures, p. 60.

[279] Essay, i. 534 (bk. ii. ch. xiii.).

[280] Smith's Works (1859), i. 295.

[281] Observations on the Effects of the Corn-laws, 1814; Inquiry into the Nature and Progress of Rent, 1815; and The Grounds of an Opinion on the Policy of restricting the Importation of Foreign Corn, intended as an appendix to the Observations on the Corn-laws, 1815.

[282] Inquiry into Rent, p. 1.

[283] Ibid. p. 16.

[284] Essay, ii. 35 (bk. iii. ch. ii.).

[285] Inquiry into Rent, p. 20.

[286] Ibid. p. 18.

[287] Ibid. p. 38.

[288] Inquiry into Rent, p. 20.

[289] Ibid. p. 37.

[290] Essay on the Application of Capital to Land, by a Fellow of University College, Oxford, 1815.

[291] Essay, p. 19.

[292] In An Inquiry into the Nature of the Corn-laws, and again (1801) in Observations on Agriculture, etc., vol. v. 401-51.

[293] Political Works, i. 485, etc. In this paper, I may add, Cobbett, not yet a Radical, accepts Malthus's view of the tendency of the human species to multiply more quickly than its support. He does not mention Malthus, but speaks of the belief as universally admitted, and afterwards illustrates it amusingly by saying that, in his ploughboy days, he used to wonder that there was always just enough hay for the horses and enough horses for the hay.



CHAPTER V

RICARDO

I. RICARDO'S STARTING-POINT

David Ricardo,[294] born 19th April 1772, was the son of a Dutch Jew who had settled in England, and made money upon the Stock Exchange. Ricardo had a desultory education, and was employed in business from his boyhood. He abandoned his father's creed, and married an Englishwoman soon after reaching his majority. He set up for himself in business, and, at a time when financial transactions upon an unprecedented scale were giving great opportunities for speculators, he made a large fortune, and about 1814 bought an estate at Gatcombe Park, Gloucestershire. He withdrew soon afterwards from business, and in 1819 became member of parliament. His death on 11th September 1823 cut short a political career from which his perhaps too sanguine friends anticipated great results. His influence in his own department of inquiry had been, meanwhile, of the greatest importance. He had shown in his youth some inclination for scientific pursuits; he established a laboratory, and became a member of scientific societies. The perusal of Adam Smith's Wealth of Nations in 1799 gave him an interest in the application of scientific methods to the questions with which he was most conversant. Accepting Adam Smith as the leading authority, he proceeded to think out for himself certain doctrines, which appeared to him to have been insufficiently recognised by his teacher. The first result of his speculations was a pamphlet published in 1809 upon the depreciation of the currency. Upon that topic he spoke as an expert, and his main doctrines were accepted by the famous Bullion Committee. Ricardo thus became a recognised authority on one great set of problems of the highest immediate interest. Malthus's Inquiry into Rent suggested another pamphlet; and in 1817, encouraged by the warm pressure of his friend, James Mill, he published his chief book, the Principles of Political Economy and Taxation. This became the economic Bible of the Utilitarians. The task of a commentator or interpreter is, for various reasons, a difficult one.

There is a certain analogy between Ricardo and a very different writer, Bishop Butler. Each of them produced a great effect by a short treatise, and in each case the book owed very little to the ordinary literary graces. Ricardo's want of literary training, or his natural difficulty of utterance, made his style still worse than Butler's; but, like Butler, he commands our respect by his obvious sincerity and earnestness. He is content when he has so expressed his argument that it can be seized by an attentive reader. He is incapable of, or indifferent to, clear and orderly exposition of principles. The logic is there, if you will take the trouble to look for it. Perhaps we ought to be flattered by this tacit reliance upon our patience. 'You,' Ricardo, like Butler, seems to say to us, 'are anxious for truth: you do not care for ornament, and may be trusted to work out the full application of my principles.' In another respect the two are alike. Butler's argument has impressed many readers as a demolition of his own case. It provokes revolt instead of adhesion. Ricardo, an orthodox economist, laid down principles which were adopted by Socialists to upset his own assumptions. Such a God as you worship, said Butler's opponents, is an unjust being, and therefore worse than no God. Such a system as you describe, said Ricardo's opponents, is an embodiment of injustice, and therefore to be radically destroyed. Admitting the logic, the argument may be read as a reductio ad absurdum in both cases.

Ricardo has involved himself in certain special difficulties. In the first place, he presupposes familiarity with Adam Smith. The Principles is a running comment upon some of Smith's theories, and no attempt is made to reduce them to systematic order. He starts by laying down propositions, the proof of which comes afterwards, and is then rather intimated than expressly given. He adopts the terminology which Smith had accepted from popular use,[295] and often applies it in a special significance, which is at least liable to be misunderstood by his readers, or forgotten by himself. It is difficult, again, to feel sure whether some of his statements are to be taken as positive assertions of fact, or merely as convenient assumptions for the purposes of his argument. Ricardo himself, as appears in his letters, was painfully aware of his own awkwardness of expression, and upon that point alone all his critics seem to be in tolerable agreement. Happily, it will be enough for my purpose if I can lay down his essential premises without following him to the remoter deductions.

Ricardo's pamphlet upon Malthus (1815) gives a starting-point. Ricardo cordially adopts Malthus's theory of rent, but declares that it is fatal to some of Malthus's conclusions. Malthus, we have seen, wished to regard rent as in some sense a gift of Providence—a positive blessing due to the fertility of the soil. Ricardo maintains, on the contrary, that 'the interest of the landlord is necessarily opposed to the interest of every other class in the community.'[296] The landlord is prosperous when corn is scarce and dear; all other persons when it is plentiful and cheap. This follows upon Malthus's own showing. As men are forced to have recourse to inferior soils, the landlord obtains a larger share of the whole produce; and, moreover, since corn also becomes more valuable, will have a larger share of a more valuable product. The question apparently in dispute—whether we should be glad that some land is better than the worst, or sorry because all is not equal to the best—seems rather idle. The real question, however, is whether rent, being a blessing, should be kept up by protection,[297] or, being a curse, should be brought down by competition? What is the real working of the system? Set the trade free, says Ricardo, and the capital will be withdrawn from the poor land and employed upon manufactures, to be exchanged for the corn of other countries.[298] The change must correspond to a more advantageous distribution of capital, or it would not be adopted. The principle involved in this last proposition is, he adds, one of the 'best established in the science of political economy, and by no one is more readily admitted than by Mr. Malthus.' To enforce protection would be, on Malthus's illustration, to compel us to use the 'worst machines, when, at a less expense, we could hire the very best from our neighbours.'[299] Briefly, then, the landlord's interest is opposed to the national interest, because it enforces a worse distribution of capital. He compels us to get corn from his worst land, instead of getting it indirectly, but in greater quantity, from our spinning-jennies.

For Ricardo, as for Malthus, the ultimate driving force is the pressure of population. The mass of mankind is always struggling to obtain food, and is able to multiply so rapidly as to exhaust any conceivable increase of supplies. The landlord class alone profits. The greater the struggle for supply the greater will be the share of the whole produce which must be surrendered to it. Beyond this, however, lies the further problem which specially occupied Ricardo. How will the resulting strain affect the relations of the two remaining classes, the labourers and the capitalists? The ultimate evil of protection is the bad distribution of capital. But capital always acts by employing labour. The farmer's capital does not act by itself, but by enabling his men to work. Hence, to understand the working of the industrial machinery, we have to settle the relation of wages and profits. Ricardo states this emphatically in his preface. Rent, profit, and wages, he says, represent the three parts into which the whole produce of the earth is divided. 'To determine the laws which regulate this distribution is the principal problem in political economy'; and one, he adds, which has been left in obscurity by previous writers.[300] His investigations are especially directed by the purpose thus defined. He was the first writer who fairly brought under distinct consideration what he held, with reason, to be the most important branch of economical inquiry.

There was clearly a gap in the economic doctrine represented by the Wealth of Nations. Adam Smith was primarily concerned with the theory of the 'market.' He assumes the existence of the social arrangement which is indicated by that phrase. The market implies a constitution of industrial agencies such that, within it, only one price is possible for a given commodity, or, rather, such that a difference of price cannot be permanent. According to the accepted illustration, the sea is not absolutely level, but it is always tending to a level.[301] A permanent elevation at one point is impossible. The agency by which this levelling or equilibrating process is carried out is competition, involving what Smith called the 'higgling of the market.' The momentary fluctuation, again, supposes the action of 'supply and demand,' which, as they vary, raise and depress prices. To illustrate the working of this machinery, to show how previous writers had been content to notice a particular change without following out the collateral results, and had thus been led into fallacies such as that of the 'mercantile system,' was Smith's primary task.

Beyond or beneath these questions lie difficulties, which Smith, though not blind to their existence, treated in a vacillating and inconsistent fashion. Variations of supply and demand cause fluctuations in the price; but what finally determines the point to which the fluctuating prices must gravitate? We follow the process by which one wave propagates another; but there is still the question, What ultimately fixes the normal level? Upon this point Ricardo could find no definite statement in his teacher. 'Supply and demand' was a sacred phrase which would always give a verbal answer, or indicate the immediate cause of variations on the surface. Beneath the surface there must be certain forces at work which settle why a quarter of corn 'gravitates' to a certain price; why the landlord can get just so many quarters of corn for the use of his fields; and why the produce, which is due jointly to the labourer and the farmer, is divided in a certain fixed proportion. To settle such points it is necessary to answer the problem of distribution, for the play of the industrial forces is directed by the constitution of the classes which co-operate in the result. Ricardo saw in Malthus's doctrines of rent and of population a new mode of approaching the problem. What was wanted, in the first place, was to systematise the logic adopted by his predecessors. Rent, it was clear, could not be both a cause and an effect of price, though at different points of his treatise Smith had apparently accepted each view of the relation. We must first settle which is cause and which effect; and then bring our whole system into the corresponding order. For the facts, Ricardo is content to trust mainly to others. The true title of his work should be that which his commentator, De Quincey, afterwards adopted, the Logic of Political Economy. This aim gives a partial explanation of the characteristic for which Ricardo is most generally criticised. He is accused of being abstract in the sense of neglecting facts. He does not deny the charge. 'If I am too theoretical (which I really believe to be the case) you,' he says to Malthus, 'I think, are too practical.'[302] If Malthus is more guided than Ricardo by a reference to facts, he has of course an advantage. But so far as Malthus or Adam Smith theorised—and, of course, their statement of facts involved a theory—they were at least bound to be consistent. It is one thing to recognise the existence of facts which your theory will not explain, and to admit that it therefore requires modification. It is quite another thing to explain each set of facts in turn by theories which contradict each other. That is not to be historical but to be muddleheaded. Malthus and Smith, as it seemed to Ricardo, had occasionally given explanations which, when set side by side, destroyed each other. He was therefore clearly justified in the attempt to exhibit these logical inconsistencies and to supply a theory which should be in harmony with itself. He was so far neither more nor less 'theoretical' than his predecessors, but simply more impressed by the necessity of having at least a consistent theory.

There was never a time at which logic in such matters was more wanted, or its importance more completely disregarded. Rash and ignorant theorists were plunging into intricate problems and propounding abstract solutions. The enormous taxation made necessary by the war suggested at every point questions as to the true incidence of the taxes. Who really gained or suffered by the protection of corn? Were the landlords, the farmers, or the labourers directly interested? Could they shift the burthen upon other shoulders or not? What, again, it was of the highest importance to know, was the true 'incidence' of tithes, of a land-tax, of the poor-laws, of an income-tax, and of all the multitudinous indirect taxes from which the national income was derived? The most varying views were held and eagerly defended. Who really paid? That question interested everybody, and occupies a large part of Ricardo's book. The popular answers involved innumerable inconsistencies, and were supported by arguments which only required to be confronted in order to be confuted. Ricardo's aim was to substitute a clear and consistent theory for this tangle of perplexed sophistry. In that sense his aim was in the highest degree 'practical,' although he left to others the detailed application of his doctrines to the actual facts of the day.

II. THE DISTRIBUTION PROBLEM

The rent doctrine gives one essential datum. A clear comprehension of rent is, as he was persuaded, 'of the utmost importance to political economy.'[303] The importance is that it enables him to separate one of the primary sources of revenue from the others. It is as though, in the familiar illustration, we were considering the conditions of equilibrium of a fluid; and we now see that one part may be considered as a mere overflow, resulting from (not determining) the other conditions. The primary assumption in the case of the market is the level of price. When we clearly distinguish rent on one side from profits and wages on the other, we see that we may also assume a level of profits. There cannot, as Ricardo constantly says, 'be two rates of profit,' that is, at the same time and in the same country. But so long as rent was lumped with other sources of revenue it was impossible to see, what Malthus and West had now made clear, that in agriculture, as in manufactures, the profits of the producer must conform to the principle. Given their theory, it follows that the power of land to yield a great revenue does not imply a varying rate of profit or a special bounty of nature bestowed upon agriculture. It means simply that, since the corn from the good and bad land sells at the same price, there is a surplus on the good. But as that surplus constitutes rent, the farmer's rate of profit will still be uniform. Thus we have got rid of one complication, and we are left with a comparatively simple issue. We have to consider the problem, What determines the distribution as between the capitalist and the labourer? That is the vital question for Ricardo.

Ricardo's theory, in the first place, is a modification of Adam Smith's. He accepts Smith's statement that wages are determined by the 'supply and demand of labourers,' and by the 'price of commodities on which their wages are expended.'[304] The appeal to 'supply and demand' implies that the rate of wages depends upon unchangeable economic conditions. He endorses[305] Malthus's statement about the absurdity of considering 'wages' as something which may be fixed by his Majesty's 'Justices of the Peace,' and infers with Malthus that wages should be left to find their 'natural level.' But what precisely is this 'natural level?' If the Justice of the Peace cannot fix the rate of wages, what does fix them? Supply and demand? What, then, is precisely meant in this case by the supply and demand? The 'supply' of labour, we may suppose, is fixed by the actual labouring population at a given time. The 'demand,' again, is in some way clearly related to 'capital.' As Smith again had said,[306] the demand for labour increases with the 'increase of revenue and "stock," and cannot possibly increase without it.' Ricardo agrees that 'population regulates itself by the funds which are to employ it, and therefore always increases or diminishes with the increase or diminution of capital.'[307] It was indeed a commonplace that the increase of capital was necessary to an increase of population, as it is obvious enough that population must be limited by the means of subsistence accumulated. Smith, for example, goes on to insist upon this in one of the passages which partly anticipates Malthus.[308] But this does not enable us to separate profit from wages, or solve Ricardo's problem. When we speak of supply and demand as determining the price of a commodity, we generally have in mind two distinct though related processes. One set of people is growing corn, and another working coal mines. Each industry, therefore, has a separate existence, though each may be partly dependent upon the other. But this is not true of labour and capital. They are not products of different countries or processes. They are inseparable constituents of a single process. Labour cannot be maintained without capital, nor can capital produce without labour. Capital, according to Ricardo's definition, is the 'part of the wealth of a country which is employed in production, and consists of food, clothing, raw materials, machinery, etc., necessary to give effect to labour.'[309] That part, then, of capital which is applied to the support of the labourer—his food, clothing, and so forth—is identical with wages. To say that, if it increases, his wages increase is to be simply tautologous. If, on the other hand, we include the machinery and raw materials, it becomes difficult to say in what sense 'capital' can be taken as a demand for labour. Ricardo tells Malthus that an accumulation of profit does not, as Malthus had said, necessarily raise wages[310]; and he ultimately decided, much to the scandal of his disciple, M'Culloch, that an increase of 'fixed capital' or machinery might be actually prejudicial, under certain circumstances, to the labourer. The belief of the labouring class that machinery often injures them is not, he expressly says, 'founded on prejudice and error, but is conformable to the correct principles of political economy.'[311] The word 'capital,' indeed, was used with a vagueness which covered some of the most besetting fallacies of the whole doctrine. Ricardo himself sometimes speaks as though he had in mind merely the supply of labourers' necessaries, though he regularly uses it in a wider sense. The generalities, therefore, about supply and demand, take us little further.

From these difficulties Ricardo escapes by another method. Malthus's theory of population gives him what he requires. The 'natural price of labour' (as distinguished from its 'market price') is, as he asserts, 'that price which is necessary to enable the labourers, one with another, to subsist and perpetuate their race without either increase or diminution.'[312] This is the true 'natural price,' about which the 'market price' oscillates. An increase of capital may raise wages for a time above the natural price, but an increase of population will bring back the previous rate. Ricardo warns us, indeed, that this natural price of labour is not to be regarded as something 'absolutely fixed and constant.'[313] It varies in different times and countries, and even in the same country at different times. An English cottager now possesses what would once have been luxuries. Ricardo admits again[314] that the wages of different classes of labourers may be different, although he does not consider that this fact affects his argument. We may allow for it by considering the skilled labourer as 2 or 1-1/2 labourers rolled into one. The assumption enables him to get out of a vicious circle. He is seeking to discover the proportions in which produce will be divided between the two classes, and which co-operate in the production. The 'demand and supply' principle may show that an increase of capital will tend to increase wages, but even that tendency, as he carefully points out, can only be admitted subject to certain important reservations. In any case, if it explains temporary fluctuations, it will not ascertain the point round which the fluctuations take place. But the two variables, wages and profit, are clearly connected, and if we can once assume that one of these variables is fixed by an independent law, we may explain in what way the other will be fixed. Having got rid of 'rent,' the remaining produce has to be divided between wages and profit. If the produce be fixed, the greater the share of the labourer the less will be the share of the capitalist, and vice versa. But the labourer's share again is determined by the consideration that it must be such as to enable him to keep up the population. The capitalist will get the surplus produce after allowing to the labourer the share so determined. Everything turns ultimately upon this 'natural price'—the constant which underlies all the variations.

One other point is implied. The population is limited, as we see, by the necessity of raising supplies of food from inferior soils. Moreover, this is the sole limit. A different view had been taken which greatly exercised the orthodox economists. It was generally admitted that in the progress of society the rate of profit declined. Adam Smith explained this by arguing that, as capital increased, the competition of capitalists lowered the rate. To this it was replied (as by West) that though competition equalised profits, it could not fix the rate of profit. The simple increase of capital does not prove that it will be less profitably employed. The economists had constantly to argue against the terrible possibility of a general 'glut.' The condition of things at the peace had suggested this alarm. The mischief was ascribed to 'over-production' and not to misdirected production. The best cure for our evils, as some people thought, would be to burn all the goods in stock. On this version of the argument, it would seem that an increase of wealth might be equivalent to an increase of poverty. To confute the doctrine in this form, it was only necessary to have a more intelligent conception of the true nature of exchange. As James Mill had argued in his pamphlet against Spence, every increase of supply is also an increase of demand. The more there is to sell, the more there is to buy. The error involved in the theory of a 'glut' is the confusion between a temporary dislocation of the machinery of exchange, which can and will be remedied by a new direction of industry, and the impossible case of an excess of wealth in general.[315] Malthus never quite cleared his mind of this error, and Ricardo had to argue the point with him. Abundance of capital cannot by itself, he says, 'make capital less in demand.' The 'demand for capital is infinite.'[316] The decline in the rate of profit, therefore, depends upon another cause. 'If, with every accumulation of profit, we could tack a piece of fresh fertile land to our Island, profits would never fall.'[317] Fertile land, however, is limited. We have to resort to inferior soil, and therefore to employ capital at a less advantage. In the Principles he enforces the same doctrine with the help of Say, who had shown 'most satisfactorily' that any amount of capital might be employed.[318] If, in short, labour and capital were always equally efficient, there would be no limit to the amount producible. If the supply of food and raw materials can be multiplied, wealth can be multiplied to any amount. The admitted tendency of profits to fall must therefore be explained simply and solely by the growing difficulty of producing the food and the raw material.

Ricardo's doctrine, then, is Malthus carried out more logically. Take a nation in a state of industrial equilibrium. The produce of the worst soil just supports the labourer, and leaves a profit to the capitalist. The labourer gets just enough to keep up his numbers to the standard; the capitalist just enough profit to induce him to keep up the capital which supports the labourer. Since there can be only one rate of wages and only one rate of profit, this fixes the shares into which the whole produce of the nation is divided, after leaving to the landlord the surplus produce of the more fertile soils. Accepting this scheme as a starting-point, we get a method for calculating the results of any changes. We can see how a tax imposed upon rents or profits or wages will affect the classes which are thus related; how improvements in cultivation or machinery, or a new demand for our manufactures, will act, assuming the conditions implied in this industrial organisation; how, in short, any disturbance of the balance will work, so as to produce a new equilibrium. Ricardo exerts all his ingenuity in working out the problem which, with the help of a few assumptions, becomes mathematical. The arithmetical illustrations which he employed for the purpose became a nuisance in the hands of his disciples. They are very useful as checks to general statements, but lend themselves so easily to the tacit introduction of erroneous assumptions as often to give a totally false air of precision to the results. Happily I need not follow him into that region, and may omit any consideration of the logical value of his deductions. I must be content to say that, so far as he is right, his system gives an economic calculus for working out the ultimate result of assigned economic changes. The pivot of the whole construction is the 'margin of cultivation'—the point at which the food for a pressing population is raised at the greatest disadvantages. 'Profits,' as he says,[319] 'depend on high and low wages; wages on the price of necessaries; and the price of necessaries chiefly on the price of food, because all other requisites may be increased almost without limit.'

Ricardo takes the actual constitution of society for granted. The threefold division into landowners, capitalists, and labourers is assumed as ultimate. For him that is as much a final fact as to a chemist it is a final fact that air and water are composed of certain elements. Each class represents certain economic categories. The landlord sits still and absorbs the overflow of wealth created by others. The labourer acts a very important but in one respect a purely passive part. His whole means of subsistence are provided by the capitalist, and advanced to him in the shape of wages. His share in the process is confined to multiplying up to a fixed standard. The capitalist is the really active agent. The labourer is simply one of the implements used in production. His wages are part of the capitalist's 'costs of production.' The capitalist virtually raises labourers, one may say, so long as raising them is profitable, just as he raises horses for his farm. Ricardo, in fact, points out that in some cases it may be for the farmer's interest to substitute horses for men.[320] If it be essential to any product that there should be a certain number of labourers or a certain number of horses, that number will be produced. But when the expense becomes excessive, and in the case of labourers that happens as worse soils have to be broken up for food, the check is provided through its effect upon the accumulation of capital. That, therefore, becomes the essential point. The whole aim of the legislator should be to give facilities for the accumulation of capital, and the way to do that is to abstain from all interference with the free play of the industrial forces. The test, for example, of the goodness of a tax—or rather of its comparative freedom from the evils of every tax—is that it should permit of accumulation by interfering as little as possible with the tendency of the capital to distribute itself in the most efficient way.

III. VALUE AND LABOUR

To solve the distribution problem, then, it is necessary to get behind the mere fluctuations of the market, and to consider what are the ultimate forces by which the market is itself governed. What effect has this upon the theory of the market itself? This leads to a famous doctrine.

According to his disciple, M'Culloch, Ricardo's great merit was that he 'laid down the fundamental theorem of the science of value.' He thus cleared up what had before been an 'impenetrable mystery,' and showed the true relations of profit, wages, and prices.[321] Ricardo's theory of value, again, was a starting-point of the chief modern Socialist theories. It marked, as has been said,[322] the point at which the doctrine of the rights of man changes from a purely political to an economical theory. Ricardo remarks in his first chapter that the vagueness of theories of value has been the most fertile source of economic errors. He admitted to the end of his life that he had not fully cleared up the difficulty. Modern economists have refuted and revised and discussed, and, let us hope, now made everything quite plain. They have certainly shown that some of Ricardo's puzzles implied confusions singular in so keen a thinker. That may serve as a warning against dogmatism. Boys in the next generation will probably be asked by examiners to expose the palpable fallacies of what to us seem to be demonstrable truths. At any rate, I must try to indicate the critical point as briefly as possible.

The word 'value,' in the first place, has varying meanings, which give an opportunity for writers of text-books to exhibit their powers of lucid exposition. The value of a thing in one sense is what it will fetch; the quantity of some other thing for which it is actually exchanged in the market. In that sense, as Ricardo incidentally observes,[323] the word becomes meaningless unless you can say what is the other thing. It is self-contradictory to speak as if a thing by itself could have a constant or any value. Value, however, may take a different sense. It is the economic equivalent of the 'utility' of Bentham's 'felicific calculus.' It means the 'lot of pleasure' which causes a thing to be desirable. If we could tell how many units of utility it contained we could infer the rate of exchange for other things. The value of anything 'in use' will correspond to the number of units of utility which it contains; and things which have the same quantity of 'utilities' will have the same 'exchangeable value.' Ricardo can thus consider the old problem of finding 'an invariable measure of value.' He points out the difficulty of finding any particular thing which will serve the purpose, inasmuch as the relations of everything to everything else are constantly varying. He therefore proposes to make use of an imaginary measure. If gold were always produced under exactly the same circumstances, with the same labour and the same capital, it would serve approximately for a standard. Accordingly he gives notice that, for the purposes of his book, he will assume this to be the case, and money to be 'invariable in value.'[324] We can thus, on the one hand, compare values at different periods. A thing has the same value at all times which at all times requires 'the same sacrifice of toil and labour to produce it.'[325] The 'sacrifice' measures the 'utility,' and we may assume that the same labour corresponds in all ages to the same psychological unit. But, on the other hand, at any given period things will exchange in proportion to the labour of producing them. This follows at once from Ricardo's postulates. Given the single rate of wages and profits, and assuming the capital employed to be in the same proportion, things must exchange in proportion to the quantity of labour employed; for if I got the same value by employing one labourer as you get by employing two, my profits would be higher. Ricardo, indeed, has to allow for many complexities arising from the fact that very different quantities of capital are required in different industries; but the general principle is given by the simplest case. Hence we have a measure of value, applicable at any given time and in comparing different times. It implies, again, what M'Culloch sums up as the 'fundamental theorem,' that the value of 'freely produced commodities' depends on the quantity of labour required for their 'production.' What is made by two men is worth twice what is made by one man. That gives what M'Culloch calls the 'clue to the labyrinth.'

The doctrine leads to a puzzle. If I can measure the 'sacrifice,' can I measure the 'utility' which it gains? The 'utility' of an ounce of gold is not something 'objective' like its physical qualities, but varies with the varying wants of the employer. Iron or coal may be used for an infinite variety of purposes and the utility will be different in each. The thing may derive part of its 'utility' from its relation to other things. The utility of my food is not really separate from the utility of my hat; for unless I eat I cannot wear hats. My desire for any object, again, is modified by all my other desires, and even if I could isolate a 'desire' as a psychological unit, it would not give me a fixed measure. Twice the article does not give twice the utility; a double stimulus may only add a small pleasure or convert it into agony. These and other difficulties imply the hopelessness of searching for this chimerical unit of 'utility' when considered as a separate thing. It shifts and escapes from our hands directly we grasp it. Ricardo discusses some of these points in his interesting chapter on 'Value and Riches.' Gold, he says, may cost two thousand times more than iron, but it is certainly not two thousand times as useful.[326] Suppose, again, that some invention enables you to make more luxuries by the same labour, you increase wealth but not value. There will be, say, twice as many hats, but each hat may have half its former value. There will be more things to enjoy, but they will only exchange for the same quantity of other things. That is, he says, the amount of 'riches' varies, while the amount of value is fixed. This, according to him, proves that value does not vary with 'utility.' 'Utility,' as he declares in his first chapter, is 'absolutely essential to value,' but it is 'not the measure of exchangeable value.'[327] A solution of these puzzles may be sought in any modern text-book. Ricardo escapes by an apparently paradoxical conclusion. He is undertaking an impossible problem when he starts from the buyers' desire of an 'utility.' Therefore he turns from the buyers to the sellers. The seller has apparently a measurable and definable motive—the desire to make so much per cent. on his capital.[328] Ricardo, unfortunately, speaks as though the two parties to the bargain somehow represented mutually exclusive processes. 'Supply and demand' determine the value of 'monopolised articles,' but the cost of other articles depends not 'on the state of demand and supply,' but 'on the increased or diminished cost of their production.'[329] Why 'not' and 'but'? If supply and demand corresponds to the whole play of motives which determines the bargain, this is like saying, according to the old illustration, that we must attribute the whole effect of a pair of scissors to one blade and not to the other. His view leads to the apparent confusion of taking for the cause of value not our desire for a thing, but the sacrifice we must make to attain it. Bentham[330] said, for example, that Ricardo confused 'cost' with 'value.' The denial that utility must in some sense or other determine value perplexes an intelligible and consistent meaning. It is clearly true, upon his postulates, that the value of goods, other than 'monopolised,' must conform to the cost of production. He speaks as if he confounded a necessary condition with an 'efficient cause,' and as if one of two correlative processes could be explained without the other. But the fact that there is a conformity, however brought about, was enough for his purpose. The demand of buyers, he would say, determines the particular direction of production: it settles whether hats should be made of silk or beaver; whether we should grow corn or spin cotton. But the ultimate force is the capitalist's desire for profit. So long as he can raise labourers' necessaries by employing part of his capital, he can employ the labour as he chooses. He can always produce wealth; all the wealth produced can be exchanged, and the demand always be equal to the supply, since the demand is merely the other side of the supply. The buyer's tastes decide how the capital shall be applied, but does not settle how much wealth there shall be, only what particular forms it shall take. Somehow or other it must always adjust itself so that the value of each particular kind shall correspond to the 'cost of production.' The cost of production includes the tools and the raw materials, which are themselves products of previous labour. All capital itself is ultimately the product of labour, and thus, as Ricardo incidentally says, may be regarded as 'accumulated labour.'[331]

This phrase sums up the doctrine which underlies his theory of value and indicates its connection with the theory of distribution. Ricardo had perceived that the supply and demand formula which would serve sufficiently in problems of exchange, or the fluctuations of market-price, could not be made to solve the more fundamental problem of distribution. We must look beneath the superficial phenomena and ask what is the nature of the structure itself: what is the driving force or the mainspring which works the whole mechanism. We seem, indeed, to be inquiring into the very origin of industrial organisation. The foundation of a sound doctrine comes from Adam Smith. Smith had said that in a primitive society the only rule would be that things should exchange in proportion to the labour of getting them. If it cost twice as much labour to kill a beaver as to kill a deer, one beaver would be worth two deer. In accepting this bit of what Smith's commentator, Dugald Stewart,[332] calls 'theoretical' or 'conjectural' history, Ricardo did not mean to state a historical fact. He was not thinking of actual Choctaws or Cherokees. The beaver was exchanged for the deer about the time when the primitive man signed the 'social contract.' He is a hypothetical person used for purposes of illustration and simplification. Ricardo is not really dealing with the question of origins; but he is not the less implying a theory of structure. It did not matter that the 'social contract' was historically a figment; it would serve equally well to explain government. It did not matter that actual savages may have exchanged beavers and deer by the help of clubs instead of competition in the market. The industrial fabric is what would have been had it been thus built up. It can be constructed from base to summit by the application of his formula. As in the imaginary state of deer and beaver, we have a number of independent persons making their bargains upon this principle of the equivalence of labour; and that principle is supposed to be carried out so that the most remote processes of the industrial machinery can be analysed into results of this principle. This gives a sufficient clue to the whole labyrinth of modern industry, and there is no need of considering the extinct forms of social structure, which we know to have existed, and under which the whole system of distribution took place under entirely different conditions.[333] A great change has taken place since the time of the deer and beaver: the capitalist has been developed, and has become the motive power. The labourer's part is passive; and the 'value' is fixed by the bargaining between the proprietors of 'accumulated labour,' forced by competition to make equal profits, instead of being fixed by the equitable bargain between the two hunters exchanging the products of their individual labour. Essentially, however, the principle is the same. In the last as in the first stage of society, things are exchanged in proportion to the labour necessary to produce them. Now it is plain enough that such a doctrine cannot lead to a complete solution of the problem of distribution. It would be a palpably inadequate account of historical processes which have determined the actual relation of classes. The industrial mechanism has been developed as a part of the whole social evolution; and, however important the economic forces, they have been inextricably blended with all the other forces by which a society is built up. For the same reason, Ricardo's theorem would be inadequate 'sociologically,' or as a formula which would enable us to predict the future distribution of wealth. It omits essential factors in the process, and therefore supposes forces to act automatically and invariably which will in fact be profoundly modified in societies differently organised and composed of individuals differing in character. The very fundamental assumptions as to the elasticity of population, and the accumulation of capital as wages and profits fluctuate, are clearly not absolute truths. An increase of the capitalist's share, for example, at the expense of wages, may lead to the lowered efficiency of the labourer; and, instead of the compensating process supposed to result from the stimulus to accumulation, the actual result may be a general degeneration of the industry. Or, again, the capacity of labourers to combine both depends and reacts upon their intelligence and moral character, and will profoundly modify the results of the general competition.[334] Such remarks, now familiar enough, are enough to suggest that a full explanation of the economic phenomena would require reference to considerations which lie beyond the proper sphere of the economist. Yet the economist may urge that he is making a fair and perhaps necessary abstraction. He may consider the forces to be constant, although he may be fully aware that the assumption requires to be corrected when his formulae are applied to facts. He may consider what is the play at any given time of the operations of the market, though the market organisation is itself dependent upon the larger organisation of which it is a product. He does not profess to deal in 'sociology,' but 'pure political economy.' In that more limited sphere he may accept Ricardo's postulates. The rate of wages is fixed at any given moment by the 'labour market.' That is the immediate organ through which the adjustment is effected. Wages rise and fall like the price of commodities, when for any reason the number of hirers or the number of purchasers varies. The 'supply and demand' formula, however, could not, as Ricardo saw, be summarily identified with labour and capital. We must go behind the immediate phenomena to consider how they are regulated by the ultimate moving power. Then, with the help of the theories of population and rent, we find that the wages are one product of the whole industrial process. We must look beyond the immediate market fluctuation to the effect upon the capitalists who constitute the market. The world is conceived as one great market, in which the motives of the capitalist supply the motive power; and the share which goes to the labourer is an incidental or collateral result of the working of the whole machinery. Now, though the sociologist would say that this is quite inadequate for his purpose, and that we must consider the whole social structure, he may also admit that the scheme has a validity in its own sphere. It describes the actual working of the mechanism at any given time; and it may be that in Ricardo's time it gave an approximate account of the facts. To make it complete, it requires to be set, so to speak, in a more general framework of theory; and we may then see that it cannot give a complete solution. Still, as a consistent scheme which corresponds to the immediate phenomena, it helps us to understand the play of the industrial forces which immediately regulate the market.

Ricardo's position suggested a different line of reply. The doctrines that capital is 'accumulated labour' and that all value is in proportion to the labour fell in with the Socialist theory. If value is created by labour, ought not 'labour' to possess what it makes? The right to the whole produce of labour seemed to be a natural conclusion. Ricardo might answer that when I buy your labour, it becomes mine. I may consider myself to have acquired the rights of the real creator of the wealth, and to embody all the labourers, whose 'accumulated labour' is capital. Still, there is a difficulty. The beaver and deer case has an awkward ethical aspect. To say that they are exchanged at such a rate seems to mean that they ought to be exchanged at the rate. This again implies the principle that a man has a right to what he has caught; that is, to the whole fruits of his labour. James Mill, as we have seen, starts his political treatise by assuming this as obvious.[335] He did not consider the possible inferences; for it is certainly a daring assumption that the principle is carried out by the economic system. According to Ricardo rent is paid to men who don't labour at all. The fundholder was a weight upon all industry, and as dead a weight as the landlord. The capitalist, Ricardo's social mainspring, required at least cross-examination. He represents 'accumulated labour' in some fashion, but it is not plain that the slice which he takes out of the whole cake is proportioned accurately to his personal labour. The right and the fact which coincided in the deer and beaver period have somehow come to diverge.

Here, then, we are at a point common to the two opposing schools. Both are absolute 'individualists' in different senses. Society is built up, and all industrial relations determined, by the competition of a multitude of independent atoms, each aiming at self-preservation. Malthus's principle applies this to the great mass of mankind. Systematically worked out, it has led to Ricardo's identification of value with quantities of labour. Keeping simply to the matter of fact, it shows how a small minority have managed to get advantages in the struggle, and to raise themselves upon the shoulders of the struggling mass. Malthus shows that the resulting inequality prevents the struggle from lowering every one to starvation point. But the advantage was not obvious to the struggling mass which exemplified the struggle for existence. If equality meant not the initial facts but the permanent right, society was built upon injustice. Apply the political doctrine of rights of man to the economic right to wealth, and you have the Socialist doctrine of right to the whole produce of labour. It is true that it is exceedingly difficult to say what each man has created when he is really part of a complex machinery; but that is a problem to which Socialists could apply their ingenuity. The real answer of the political economists was that although the existing order implied great inequalities of wealth it was yet essential to industrial progress, and therefore to an improvement in the general standard of comfort. This, however, was the less evident the more they insisted upon the individual interest. The net result seemed to be that by accident or inheritance, possibly by fraud or force, a small number of persons have got a much larger share of wealth than their rivals. Ricardo may expound the science accurately; and, if so, we have to ask, What are the right ethical conclusions?

For the present, the Utilitarians seem to have considered this question as superfluous. They were content to take the existing order for granted; and the question remains how far their conclusions upon that assumption could be really satisfactory.

IV. THE CLASSICAL POLITICAL ECONOMY.

Ricardo had worked out the main outlines of the 'Classical Political Economy': the system which to his disciples appeared to be as clear, consistent, and demonstrable as Euclid; and which was denounced by their opponents as mechanical, materialistic, fatalistic, and degrading. After triumphing for a season, it has been of late years often treated with contempt, and sometimes banished to the limbo of extinct logomachies. It is condemned as 'abstract.' Of all delusions on the subject, replies a very able and severe critic,[336] there is none greater than the belief that it was 'wholly abstract and unpractical.' Its merits lay in its treatment of certain special questions of the day; while in the purely scientific questions it was hopelessly confused and inconsistent. Undoubtedly, as I have tried to point out, Malthus and Ricardo were reasoning upon the contemporary state of things. The doctrine started from observation of facts; it was too 'abstract' so far as it neglected elements in the concrete realities which were really relevant to the conclusions. One cause of confusion was the necessity of starting from the classification implied in ordinary phrases. It is exemplified by the vague use of such words as 'capital,' 'value,' 'supply and demand.' Definitions, as is often remarked,[337] come at the end of an investigation, though they are placed at the beginning of an exposition. When the primary conceptions to be used were still so shifting and contradictory as is implied in the controversies of the day, it is no wonder that the formulae should be wanting in scientific precision. Until we have determined what is meant by 'force' we cannot have a complete science of dynamics. The economists imagined that they had reached the goal before they had got rid of ambiguities hidden in the accepted terminology. Meanwhile it will be enough if I try to consider broadly what was the nature of the body of statements which thus claimed to be an elaborated science.