7. We may now turn our attention to what is perhaps as difficult a passage as was ever incorporated into a treatise on economics. I refer to Sections IV and V of Chapter I of Ricardo’s _Principles_. These sections treat of the _complication of interest_ in the labor theory of value.[62] But if all Ricardo claims in his labor theory is that normal values are _in proportion to_ labor costs, why is not the explanation satisfactory that interest is merely a rate taken upon wages costs? The difficulty is that in reality two commodities may cost the same amount of wages (because, as Ricardo has it, they require the same amount of labor for production) and yet cost very different amounts of interest. In such a case the two commodities have the same labor costs but have different entrepreneur’s costs, and consequently different exchange values. This comes about because the entrepreneur (or series of entrepreneurs) who produces commodity A may have been compelled to pay the money wages to the labor producing it a longer time before A can be put on the market than is the case with commodity B, though the _amount_ of wages paid in both cases be the same. 8. In the end, Ricardo’s theory of the interest difficulty reduces itself to the statement that has just been finished. That is to say, the above is the true interpretation of his argument. But Ricardo’s own presentation of the difficulty is superficially so different from this statement that it will be necessary to prove this interpretation in detail. (1) In the first place, he separates the general case of “profits” paid on a longer “advance” of wages into three subdivisions. “According as capital is rapidly perishable, and requires to be frequently reproduced, or is of slow consumption, it is classed under the heads of circulating or of fixed capital.” (“A division not essential, and in which the line of demarcation cannot be accurately drawn.”—Note.) “Two trades may employ the same amount of capital; but it may be very differently divided with respect to the portion which is fixed, and that which is circulating.” “A rise in the wages of labour cannot fail to affect unequally commodities produced under such different circumstances” (in respect to the proportions of these two kinds of capital in different trades.)[63] Section V is written to show that different degrees of durability in the durable capital have the same effect as different proportions of the durable to the circulating capital, and is merely an example of the bad arrangement of the _Principles_.[64] Formally, there is a third case. Goods slower to market must bring more “profit.” But all cases come to the same thing, _i. e._, a longer investment of entrepreneur’s “capital” in labor, before the commodity produced can be put finally upon the market. (2) In the second place, the effect of all this, says Ricardo, is to introduce a _second cause of variation of “relative values”_. The