Principles of Political Economy and Taxation. 165 



capitalist will either cease to retain his capital in its office, and 

 will convert a portion of it into expenditure : or he will transfer 

 it to some other country where profits are higher. This resource 

 is one which, though probably not called into action by a differ- 

 ence of one or two per cent, between domestic and foreign pro- 

 fits, will undoubtedly become very active and influential, if the 

 difference should go much further, and will operate by dimi- 

 nishing the supply of the capital at home, till profits become of 

 such a magnitude as to be a sufficient inducement to the em- 

 ployment of capital at home. 



I shall suppose 7 to represent the profit on £l; so that if 

 profits be 10 per cent., y is -L or = , 1; if 15 per cent., 7 = ,15; 

 if 30 per cent., 7 =,3. The rate of profit will be 100 y per cent. 



V. Postulate of Equilibrium. 

 7. In the reasonings which we have to follow, the principles 

 which we have stated are supposed to be carried into complete ope- 

 ration, and commodities to be distributed according to the laws 

 to which those principles give rise. Thus the rate of profits of 

 agriculture and of other employments are assumed to be equal, 

 it being supposed that capital is tranferred from one employment 

 to another, till such an equilibrium is produced : though this is 

 a process which manifestly would require a considerable time, 

 and would never be completely performed. In the same man- 

 ner, assuming the postulate of wages (which as I have said is 

 perfectly gratuitous) it is clear that the changes of population 

 which it supposes would require for their accomplishment a 

 considerable course of years, during which new causes and cir- 

 cumstances might come into action, so as entirely to modify the 



