Page:The Economic Journal Volume 1.djvu/793

 wEws 771 tine he is able to retort upon certain of Ricardo's critics that they also show a tendency to be one-sided though in another way. For whilst it is true that the doctrine of cost of production fails by itself to afford a complete solution of the problem of value, the same is equally true of the doctrine of final utility taken by itself. A broader treatment is necessary; and if we are really to solve the problem, we must learn to realise its complexity, and not to confine ourselves to the consideration either of wants on the one hand or of efforts and activities on the other. When we pass to the general problem of distribution we find that Ricardo is again open to the charge of concentrating his attention upon one aspect only of a complex phenomenon. Mr. Conner regards Ricardo's position that the rate of profits depends upon the rate of wages as containing the gist of his general theory of distribution. Strictly speaking, however, in the sense in which Ricardo uses the terms wages and profits this is a merely verbal proposition. If a quantity is divided between two recipients, it is clear that the proportionate share of the one cannot increase without that of the other diminishing, and rice versd. The shares, therefore, mutually determine one another. But in this barren ,sense the rate of profits no more depends upon the rate of wages than the rate of wages depends upon the rate of profits, and we have not really made any progress. The importance of the theorem as laid down by Ricardo depends upon the definite way in which he regards the supply of labour as determined by the standard of comfort of the working classes, while practically no similar fundamental principle is recognised in regard to the supply of capital. It is true that Ricardo does not altogether overlook the reaction of the rate of profits upon the accumulation of capital. Speaking of the farmer and manufacturer, he observes that ' their motive for accumulation will diminish with every diminution of profit, and will cease altogether when their profits are so low as not to afford them an adequate compensation for their trouble, and the risk which they must necessarily encounter in employing their capital productively.' Nowhere, however, does he develop the ideas here suggested, nor can they be said to form a substantive part of his system. Hence his treatment of the problem of distribution is one-sided, and the same may be said of a considerable part of his theory of the incidence of taxation. Mr. Conner discusses the use which socialist writers have made of Ricardo's theories of value and wages, and has no difficulty in showing that their arguments are in the main baed upon misunderstandings of what Ricardo really intended. It iseasy to find isolated statements justify- ing their deductions. Ricardo, indeed, begins by laying down without qualification the proposition that the value of a commodity depends upon the relative quantity of labour which is necessary for its production. But he goes on immediately to point out how the employ- ment of capital considerably modifies this principle; and he accordingly limits the unqualified application of the rule that 'ommodities never vary in value, unless a greater or less quantity of labour be bestowed