cisely termed the cost of production of
wages; or, more concisely still, the cost of wages, meaning their cost
in the "original purchase money," labour.

We have now arrived at a distinct conception of Mr. Ricardo's theory of
profits in its most perfect state. And this theory we conceive to be the
basis of the true theory of profits. All that remains to do is to clear
it from certain difficulties which still surround it, and which, though
in a greater degree apparent than real, are not to be put aside as
wholly imaginary.

Though it is true that tools, materials, and buildings (it is to be
wished that there were some compact designation for all these essentials
of production taken together,) are themselves the produce of labour, and
are only on that account to be ranked among the expenses of production;
yet the _whole_ of their value is not resolvable into the wages of the
labourers by whom they were produced. The wages of those labourers were
paid by a capitalist, and that capitalist must have the same profit upon
his advances as any other capitalist; when, therefore, he sells the
tools or materials, he must receive from the purchaser not only the
reimbursement of the wages he has paid, but also as much more as will
afford him the ordinary rate of profit. And when the producer, after
buying the tools and employing them in his own occupation, comes to
estimate his gains, he must set aside a portion of the produce to
replace not only the wages paid both by himself and by the tool-maker,
but also the profits of the tool-maker, advanced by himself out of his
own capital.

It is not correct, therefore, to state that all which the capitalist
retains after replacing wages forms his profit. It is true the whole
return to capital is either wages or profits; but profits do not compose
merely the surplus after replacing the outlay; they also enter into the
outlay itself. Capital is expended partly in paying or reimbursing
wages, and partly in paying the profits of other capitalists, whose
concurrence was necessary in order to bring together the means of
production.

If any contrivance, therefore, were devised by which that part of the
outlay which consists of previous profits could be either wholly or
partially dispensed with, it is evident that more would remain as the
profit of the immediate producer; while, as the quantity of _labour_
necessary to produce a given quantity of the commodity would be
unaltered, as well as th