president's address — SECTION F. 133 



prevailina: doctrine was that in any transaction such as a sale 

 there could be a profit to only one party to the bargain. 

 Adam Smith dispelled this illusion, and in the present day 

 the theory is held to be true only in selling horses and 

 floating mining companies. 



In his treatment of the question Ricardo invariably regards 

 wages and profit as two antagonistic forces continually in 

 opposition, any circumstances favourable to the one being 

 necessarily prejudicial to the other. " Can any point," he 

 says, " be more clearly established than that profits must fall 

 with a rise of wages." And again, " The necessity which 

 the labourer would be under of paying an increased price for 

 such necessaries would oblige him to demand more wages, 

 and whatever increases wages necessarily decreases profits." 

 Mr. Mill elaborates the theory of a wages fund. He defines 

 wages as " the remuneration of labour," and profits as " the 

 remuneration of abstinence." The capitalist, he says, is the 

 person " who from funds in his possession pays the wages of 

 the labourers or supports them during the work." " The 

 cause of profit," he says, " is that labour produces more than 

 is required for its support." He concludes his exhaustive 

 treatment of the question in these words : — " We thus arrive 

 at the conclusion of Ricardo and others, that the rate of 

 profits depends on wages, rising as wages fall and falling as 

 wages rise." In view of these quotations it is somewhat 

 difficult to understand Ricardo's latest editor, Mr. E. C. K. 

 Conner, when he says, speaking of Ricardo, " Just notice that 

 he never asserts or imagines that wages and profits cannot 

 increase together;" and then immediately proceeds to say, 

 "Again, the two agents in production, labour and capital, so 

 divide total value between them that an increase in the value 

 obtained by the one implies a diminution in the share of value 

 falling to the other." The position taken up by Ricardo and 

 Mill is that wages and profits are two variables, that the one 

 varies inversely as the other, and that when combined they 

 constitute an invariable quantity. The truth of this doctrine 

 seems to me further to depend on the assumption that the 

 circumstances attending production are also invariable, but 

 we know such an assumption to be untrue. The rapid 

 increase in the facilities for transit, the extraordinary 

 development occasioned by the introduction of machinery, 

 the revolution wrought by improved processes, have all 

 influenced the rates both of wages and profits. The extent 

 and direction in which such influences have affected wages 



