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.43He 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,44there is none greater than the belief that it was 'wholly abstract and unpractical.'