.

We have supposed, for simplicity, that wages are paid in the finished
commodity. The agricultural labourers, in our example, were paid in
corn, and if we had called them weavers, we should have supposed them to
be paid in cloth. This supposition is allowable, for it is obviously of
no consequence, in a question of value, or cost of production, what
precise article we assume as the medium of exchange. The supposition
has, besides, the recommendation of being conformable to the most
ordinary state of the facts; for it is by the sale of his own finished
article that each capitalist obtains the means of hiring labourers to
renew the production; which is virtually the same thing as if, instead
of selling the article for money and giving the money to his labourers,
he gave the article itself to the labourers, and they sold it for their
daily bread.

Assuming, therefore, that the labourer is paid in the very article he
produces, it is evident that, when any saving of expense takes place in
the production of that article, if the labourer still receives the same
cost of production as before, he must receive an increased quantity, in
the very same ratio in which the productive power of capital has been
increased. But, if so, the outlay of the capitalist will bear exactly
the same proportion to the return as it did before; and profits will not
rise.

The variations, therefore, in the rate of profits, and those in the cost
of production of wages, go hand in hand, and are inseparable. Mr.
Ricardo's principle, that profits cannot rise unless wages fall, is
strictly true, if by low wages be meant not merely wages which are the
produce of a smaller quantity of labour, but wages which are produced at
less cost, reckoning labour and previous profits together. But the
interpretation which some economists have put upon Mr. Ricardo's
doctrine, when they explain it to mean that profits depend upon the
proportion which the labourers collectively receive of the aggregate
produce, will not hold at all; for that, in our first example, remained
the same, and yet profits rose.

The only expression of the law of profits, which seems to be correct,
is, that they depend upon the cost of production of wages. This must be
received as the ultimate principle.

From this may be deduced all the corollaries which Mr. Ricardo and
others have drawn from his theory of profits as expounded by himself.
The cost of production of the wages of one labourer