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Phed
. What, without reimbursement?

X
. Assuredly, without a farthing of reimbursement: it is Mr. Ricardo’s doctrine that no variation in either profits or wages can ever affect the price; if wages rise or fall, the only consequence is, that profits must fall or rise by the same sum; so again, if profits rise or fall, wages must fall or rise accordingly.

Phed
. You mean, then, to assert that, when the value of the labor rises (as in the first of your two cases) by three shillings, this rise must be paid out of the six shillings which had previously gone to profits.

X
. I do; and your reason for questioning this opinion is, I am sure, because you think that no capitalist would consent to have his profits thus diminished, but would liberate himself from this increased expense by charging it upon the price. Now, if I prove that he cannot liberate himself in this way, and that it is a matter of perfect indifference to him whether the price rises or not, because in either case he must lose the three shillings, I suppose that I shall have removed the sole ground you have for opposing me.

Phed
. You are right: prove this, X., “et eris mihi magnus Apollo.”

X
. Tell me, then, Phaedrus, when the value of labor rises–in other words, when wages rise–what is it that causes them to rise?

Phed
. Ay, what is it that causes them, as you say? I should be glad to hear your opinion on that subject.

X
. My opinion is, that there are only two

[Footnote: There is another case in which wages have a constant tendency to rise–namely, when the population increases more slowly than the demand for labor. But this case it is not necessary to introduce into the dialogue: first, because it is gradual and insensible in its operation; secondly, because, if it were otherwise, it would not disturb any part of the argument. ]

great cases in which wages rise, or seem to rise:

1. When money sinks in value; for then, of course, the laborer must have more wages nominally, in order to have the same virtually. But this is obviously nothing more than an apparent rise.

2. When those commodities rise upon which wages are spent. A rise in port wine, in jewels, or in horses, will not affect wages, because these commodities are not consumed by the laborer; but a rise in manufactured goods of certain kinds, upon which perhaps two fifths of his wages are spent, will tend to raise wages: and a rise in certain kinds of food, upon which perhaps the other three fifths are spent, will raise them still more. Now, the first case being only an apparent rise, this is the only case in which wages can be said really to rise.

Phed
. You are wrong, X.; I can tell you of a third case which occurs to me whilst you are speaking. Suppose that there were a great deficiency of laborers in any trade,–as in the hatter’s trade, for instance,–that would be a reason why wages should rise in the hatter’s trade.

X
. Doubtless, until the deficiency were supplied, which it soon would be by the stimulus of higher wages. But this is a case of market value, when the supply happens to be not on a level with the demand: now, throughout the present conversation I wish studiously to keep clear of any reference to market value, and to consider exclusively that mode of exchangeable value which is usually called natural value– that is, where value is wholly uninfluenced by any redundancy or deficiency of the quantity. Waiving this third case, therefore, as not belonging to the present discussion, there remains only the second; and I am entitled to say that no cause can really and permanently raise wages but a rise in the price of those articles on which wages are spent. In the instance above stated, where the hatter’s wages rose from three shillings to three shillings and nine pence a day, some commodity must previously have risen on which the hatter spent his wages. Let this be corn, and let corn constitute one half of the hatter’s expenditure; on which supposition, as his wages rose by twenty-five per cent., it follows that corn must have risen by fifty per cent. Now, tell me, Phaedrus, will this rise in the value of corn affect the hatter’s wages only, or will it affect wages in general?