' must conform to the cost of
production. He speaks as if he confounded a necessary condition with
an 'efficient cause,' and as if one of two correlative processes could
be explained without the other. But the fact that there is a
conformity, however brought about, was enough for his purpose. The
demand of buyers, he would say, determines the particular direction of
production: it settles whether hats should be made of silk or beaver;
whether we should grow corn or spin cotton. But the ultimate force is
the capitalist's desire for profit. So long as he can raise labourers'
necessaries by employing part of his capital, he can employ the labour
as he chooses. He can always produce wealth; all the wealth produced
can be exchanged, and the demand always be equal to the supply, since
the demand is merely the other side of the supply. The buyer's tastes
decide how the capital shall be applied, but does not settle how much
wealth there shall be, only what particular forms it shall take.
Somehow or other it must always adjust itself so that the value of
each particular kind shall correspond to the 'cost of production.' The
cost of production includes the tools and the raw materials, which are
themselves products of previous labour. All capital itself is
ultimately the product of labour, and thus, as Ricardo incidentally
says, may be regarded as 'accumulated labour.'[331]

This phrase sums up the doctrine which underlies his theory of value
and indicates its connection with the theory of distribution. Ricardo
had perceived that the supply and demand formula which would serve
sufficiently in problems of exchange, or the fluctuations of
market-price, could not be made to solve the more fundamental problem
of distribution. We must look beneath the superficial phenomena and
ask what is the nature of the structure itself: what is the driving
force or the mainspring which works the whole mechanism. We seem,
indeed, to be inquiring into the very origin of industrial
organisation. The foundation of a sound doctrine comes from Adam
Smith. Smith had said that in a primitive society the only rule would
be that things should exchange in proportion to the labour of getting
them. If it cost twice as much labour to kill a beaver as to kill a
deer, one beaver would be worth two deer. In accepting this bit of
what Smith's commentator, Dugald Stewart,[332] calls 'theoretical' or
'conjectural' history, Ricardo did not mean to state a historical
f