is 'natural price'--the
constant which underlies all the variations.

One other point is implied. The population is limited, as we see, by
the necessity of raising supplies of food from inferior soils.
Moreover, this is the sole limit. A different view had been taken
which greatly exercised the orthodox economists. It was generally
admitted that in the progress of society the rate of profit declined.
Adam Smith explained this by arguing that, as capital increased, the
competition of capitalists lowered the rate. To this it was replied
(as by West) that though competition equalised profits, it could not
fix the rate of profit. The simple increase of capital does not prove
that it will be less profitably employed. The economists had
constantly to argue against the terrible possibility of a general
'glut.' The condition of things at the peace had suggested this alarm.
The mischief was ascribed to 'over-production' and not to misdirected
production. The best cure for our evils, as some people thought, would
be to burn all the goods in stock. On this version of the argument, it
would seem that an increase of wealth might be equivalent to an
increase of poverty. To confute the doctrine in this form, it was only
necessary to have a more intelligent conception of the true nature of
exchange. As James Mill had argued in his pamphlet against Spence,
every increase of supply is also an increase of demand. The more there
is to sell, the more there is to buy. The error involved in the theory
of a 'glut' is the confusion between a temporary dislocation of the
machinery of exchange, which can and will be remedied by a new
direction of industry, and the impossible case of an excess of wealth
in general.[315] Malthus never quite cleared his mind of this error,
and Ricardo had to argue the point with him. Abundance of capital
cannot by itself, he says, 'make capital less in demand.' The 'demand
for capital is infinite.'[316] The decline in the rate of profit,
therefore, depends upon another cause. 'If, with every accumulation of
profit, we could tack a piece of fresh fertile land to our Island,
profits would never fall.'[317] Fertile land, however, is limited. We
have to resort to inferior soil, and therefore to employ capital at a
less advantage. In the _Principles_ he enforces the same doctrine with
the help of Say, who had shown 'most satisfactorily' that any amount
of capital might be employed.[318] If, in short, labour and capital