The relation between capital and labour affords a good instance of the inevitable error of applying hard and fast logical conclusions to the complex and ever-varying problems of actual life. Ricardo and other distinguished writers on political economy have assumed that the two constitute a fundamental antagonistic polarity. Wealth, they say, is the joint product of capital and labour, and, as in the case of a cake which has to be divided between C and L, the more C gets the less is left for L, and _vice versâ_. The theory sounds plausible: but what says fact? In the most unmistakable manner it pronounces, as the outcome of practical experience, that the profits of capital and the wages of labour rise and fall together. High profits mean high wages, rising profits rising wages, falling profits falling wages. It has been proved so in a thousand instances, and not one can be quoted where the one factor has varied in an inverse, and not in a direct, ratio with the other. It is obvious that there must be some fallacy in Ricardo’s argument. The fallacy is this: he assumes the cake to be of fixed dimensions, whereas in point of fact it varies, sometimes diminishing to zero, or even to a negative quantity, at others expanding to many times its original size. A new gold-field is discovered in a remote country, and forthwith profits rise to cent. per cent., and wages to a pound a day; a bad season and depression of trade overtake an old country, and the gross value of the produce of many a farm is insufficient to cover expenses and depreciation, even if the labourers worked for nothing. The polarity is therefore confined to the limited and temporary case of the division of the profit, where there is a profit, in particular trades and in individual instances. And this is regulated mainly by the accustomed scale of wages and standard of living of the workmen, and their opportunities of finding employment elsewhere if dissatisfied with the terms offered to them. On the whole, it may be said that capital has the best of it on a rising, and wages on a falling, market. A manufacturer or mine-owner’s profit may rise from five to twenty per cent. without quadrupling the rate of wages; but, on the other hand, it may fall from twenty per cent. to five, or even for a time below zero, without a proportionate diminution in the price paid for labour. Capital is, in fact, the great insurer of labour, the flywheel which regulates the motion of the industrial machine. This will be best illustrated by a practical instance. The Brighton Railway Company for several consecutive years paid no dividend, or only a trifling amount, on the shareholders’ capital, but during the whole of this time it gave steady employment at good wages to upwards of ten thousand workmen. The Blaenavon Coal and Iron Company in South Wales was for many years a losing concern, and successive capitalists lost the best part of a million pounds in it, until at length it was reorganised with a small