a fluid; and we now see that one part may be considered
as a mere overflow, resulting from (not determining) the other
conditions. The primary assumption in the case of the market is the
level of price. When we clearly distinguish rent on one side from
profits and wages on the other, we see that we may also assume a level
of profits. There cannot, as Ricardo constantly says, 'be two rates of
profit,' that is, at the same time and in the same country. But so
long as rent was lumped with other sources of revenue it was
impossible to see, what Malthus and West had now made clear, that in
agriculture, as in manufactures, the profits of the producer must
conform to the principle. Given their theory, it follows that the
power of land to yield a great revenue does not imply a varying rate
of profit or a special bounty of nature bestowed upon agriculture. It
means simply that, since the corn from the good and bad land sells at
the same price, there is a surplus on the good. But as that surplus
constitutes rent, the farmer's rate of profit will still be uniform.
Thus we have got rid of one complication, and we are left with a
comparatively simple issue. We have to consider the problem, What
determines the distribution as between the capitalist and the
labourer? That is the vital question for Ricardo.

Ricardo's theory, in the first place, is a modification of Adam
Smith's. He accepts Smith's statement that wages are determined by the
'supply and demand of labourers,' and by the 'price of commodities on
which their wages are expended.'[304] The appeal to 'supply and
demand' implies that the rate of wages depends upon unchangeable
economic conditions. He endorses[305] Malthus's statement about the
absurdity of considering 'wages' as something which may be fixed by
his Majesty's 'Justices of the Peace,' and infers with Malthus that
wages should be left to find their 'natural level.' But what precisely
is this 'natural level?' If the Justice of the Peace cannot fix the
rate of wages, what does fix them? Supply and demand? What, then, is
precisely meant in this case by the supply and demand? The 'supply' of
labour, we may suppose, is fixed by the actual labouring population at
a given time. The 'demand,' again, is in some way clearly related to
'capital.' As Smith again had said,[306] the demand for labour
increases with the 'increase of revenue and "stock," and cannot
possibly increase without it.' Ricardo agrees that 'population