$ 3. Although, however, general wages, whether high or low, do not affect values, yet if wages are higher in one employment than in another, or if they rise or fall permanently in one employment without doing so in others, these inequalities do really operate upon values. The causes which make wages vary from one employment to another, have been considered in a former chapter. When the wages of an employment permanently exceed the average rate, the value of the thing produced will, in the same degree, exceed the standard determined by mere quantity of labor. Things, for example, which are made by skilled labor, exchange for the produce of a much greater quantity of unskilled labor; for no reason but because the labor is more highly paid. If, through the extension of education, the laborers competent to skilled employments were so increased in number as to diminish the difference between their wages and those of common labor, all things produced by labor of the superior kind would fall in value, compared with things produced by common labor, and these might be said, therefore, to rise in value.

before remarked that the difficulty of passing from one class of employments to a class greatly superior, has hitherto caused the wages of all those classes of laborers who are separated from one another by any very marked barrier, to depend more than might be supposed upon the increase of the population of each class, considered separately; and that the inequalities in the remuneration of labor which cannot be accounted for by differences of hardness or disagreeableness, are much greater than could exist if the competition of the laboring people generally could be brought practically to bear on each particular employment. It follows from this that wages in different employments do not rise or fall simultaneously, but are, for short, and sometimes even for long periods, nearly independent of one another. All such disparities evidently alter the relative

costs of production of different commodities, and will, therefore, be completely represented in their natural or average value.

It thus appears that the maxim laid down by some of the best political economists, that wages do not enter into value, is expressed with greater latitude than the truth warrants, or than accords with their own meaning. Wages do enter into value. The relative wages of the labor necessary for producing different commodities, affect their value just as much as the relative quantities of labor. It is true, the absolute wages paid have no effect upon values; but neither has the absolute quantity of labor. If that were to vary simultaneously and equally in all commodities, values would not be affected. If, for instance, the general efficiency of all labor were increased, so that all things without exception could be produced in the same quantity as before, with a smaller amount of labor, no trace of this general diminution of cost of production would show itself in the values of commodities. Any change which might take place in them would only represent the unequal degrees in which the improvement affected different things; and would consist in cheapening those in which the saving of labor had been the greatest, while those in which there had been some, but a less saving of labor, would actually rise in value. In strictness, therefore, wages of labor have as much to do with value as quantity of labor; and neither Ricardo nor any one else has denied the fact. In considering, however, the causes of variations in value, quantity of labor is the thing of chief importance; for when that varies, it is generally in one or a few commodities at a time, but the variations of wages (except passing fluctuations) are usually general, and have no considerable effect on value.

4. Thus far of labor, or wages, as an element in cost of production. But in our analysis, in the First Book, of

the requisites of production, we found that there is another necessary element in it beside labor. There is also capital; and this being the result of abstinence, the produce, or its value, must be sufficient to remunerate, not only all the labor required, but the abstinence of all the persons by whom the remuneration of the different classes of laborers was advanced. The return for abstinence is Profit. And profit, we have also seen, is not exclusively the surplus remaining to the capitalist after he has been compensated for his outlay, but forms, in most cases, no unimportant part of the outlay itself. The flax-spinner, part of whose expenses consists of the purchase of flax and of machinery, has had to pay, in their price, not only the wages of the labor by which the flax was grown and the machinery made, but the profits of the grower, the flax-dresser, the miner, the iron-founder, and the machine-maker. All these profits, together with those of the spinner himself, were again advanced by the weaver, in the price of his material, linen yarn; and along with them the profits of a fresh set of machine-makers, and of the miners and iron-workers who supplied them with their metallic material. All these advances form part of the cost of production of linen. Profits, therefore, as well as wages, enter into the cost of production, which determines the value of the produce.

Value, however, being purely relative, cannot depend upon absolute profits, no more than upon absolute wages, but upon relative profits only. High general profits cannot, any more than high general wages, be a cause of high values, because high general values are an absurdity and a contradiction. In so far as profits enter into the cost of production of all things, they cannot affect the value of any. It is only by entering in a greater degree into the cost of production of some things than of others, that they can have any influence on value.

For example, we have seen that there are causes which

necessitate a permanently higher rate of profit in certain employments than in others. There must be a compensation for superior risk, trouble, and disagreeableness. This can only be obtained by selling the commodity at a value above that which is due to the quantity of labor necessary for its production. If gunpowder exchanged for other things in no higher ratio than that of the labor required from first to last for producing it, no one would set up a powder-mill. Butchers are certainly a more prosperous class than bakers, and do not seem to be exposed to greater risks, since it is not remarked that they are oftener bankrupts. They seem, therefore, to obtain higher profits, which can only arise from the more limited competition, caused by the unpleasantness, and to a certain degree, the unpopularity of their trade. But this higher profit implies that they sell their commodity at a higher value than that due to their labor and outlay. All inequalities of profit which are necessary and permanent, are represented in the relative values of the commodities.

5. Profits, however, may enter more largely into the conditions of production of one commodity than of another, even though there be no difference in the rate of profit between the two employments. The one commodity may be called upon to yield profit during a longer period of time than the other. The example by which this case is usually illustrated is that of wine. Suppose a quantity of wine, and a quantity of cloth, made by equal amounts of labor, and that labor paid at the same rate. The cloth does not improve by keeping; the wine does. Suppose that, to attain the desired quality, the wine requires to be kept five years. The producer or dealer will not keep it, unless at the end of five years he can sell it for as much more than the cloth, as amounts to five years' profit, accumulated at compound interest. The wine and the cloth were made

by the same original outlay. Here then is a case in which the natural values, relatively to one another, of two commodities, do not conform to their cost of production alone, but to their cost of production plus something else. Unless, indeed, for the sake of generality in the expression, we include the profit which the wine-merchant foregoes during the five years, in the cost of production of the wine; looking upon it as a kind of additional outlay, over and above his other advances, for which outlay he must be indemnified at last.

All commodities made by machinery are assimilated, at least approximatively, to the wine in the preceding example. In comparison with things made wholly by immediate labor, profits enter more largely into their cost of production. Suppose two commodities, A and B, each requiring a year for its production, by means of a capital which we will on this occasion denote by money, and suppose to be £1,000. A is made wholly by immediate labor, the whole £1,000, being expended directly in wages. B is made by means of labor which cost £500 and a machine which cost £500, and the machine is worn out by one year's use. The two commodities will be exactly of the same value; which, if computed in money, and if profits are 20 per cent. per annum, will be £1,200. But of this £1,200, in the case of A, only £200, or one sixth, is profit; while in the case of B there is not only the £200, but as much of £500, (the price of the machine,) as consisted of the profits of the machine-maker; which, if we suppose the machine also to have taken a year for its production, is again one sixth. So that in the case of A only one sixth of the entire return is profit, whilst in B the element of profit comprises not only a sixth of the whole, but an additional sixth of a large part.

The greater the proportion of the whole capital which consists of machinery, or buildings, or material, or any