Page:The Economic Journal Volume 1.djvu/795

 RW.WS 773 portions of capital,' he clearly means that the result of the improve- ment is to increase by equal amounts the returns to different doses of capital. Mr. Gonner, however, interprets him as meaning that they are increased in equal proportions; and he is hence led wrongly to charge Ricardo with inconsistency, and also to introduce another assumption which is not really involved in Ricardo's reasoning. On the other hand, he does not explicitly formulate the really important assumptions involved, namely, first, that the demand for corn is constant and will be unaffected by a change in price, and secondly, that no corn is imported It is also worthy of special remark that in this case Ricardo, contrary Co his usual practice, is contemplating immediate and not ultimate results. ' I hope I am not understood,' he says, ' as undervaluing the importance of all sorts of improvements in agriculture to landlords. Their immediate effect is to lower rent; but as they give a great stimulus to population, and at the same time enable us to cultivate poorer lands, with less labour, they are ultimately of immense advantage to landlords. A period, however, must elapse, during which they are positively in- jurious to him.' We may accordingly reduce the opposition between Adam Smith's and Ricardo's conclusions to a minimum by considering that they relate to long and short periods respectively. Mr. Gonner regards Adam Smith's assumption that the price of corn is constant and unaffected by the supply as positively and invariably wrong. It is, however, no more violent or unjustifiable than Ricardo's assumption that the demand for corn is absolutely inelastic and unaffected by the price. The two assumptions are complementary to one another, and it is interesting to compare them. If the one can be justified as a rough approximation to the truth so far as immediate effects are concerned, the other can be similarly justified with reference to ultimate effects. The editor's final estimate of Ricardo's achievements is slightly ambiguous. On the whole he seems to us to overrate the completeness and finality of Ricardo's contributions to economic theory, while he underrates the inherent value of work of this character. ' It may be doubted,' he says,' whether the work Ricardo performed was of great value.' But he adds ' As an achievement in the development of theory it is of the very highest order. In his works we find for the first time a definite solution of the relations existing between price and remuneration foreign exchange, tha! great mystery of the past, is exhibited i;n parallel with domestin exchange; the law of rent is developed and re-stated;the connection between wages and profits, so far as the apportionment of value is concerned, indicated; while in addition he strives to shadow forth the nature of the future development of economic life, granted the permanence and universality of the assumptions which he makes. Such was the work he accomplished.' Further on, there is an implication that Ricardo almost completed the work of the deductive economist, leaving to his successors nothing but an inductive inquiry into the validity of his premisses and conclusions. 'Ricardo, we are