“In effect the point in question is of little more than theoretic importance. As a point of theory it is proper to notice it, but the circumstance it deals with has little sensible effect on the facts of exchange.”[193] 9. In the opinion of Cairnes, then, there is a failure of the law of costs due to a _failure of competition_. Since Ricardo expressly postulated “perfect competition” as a condition essential to his theory, it might seem as if the difficulty of non-competing groups is one against which he has taken the necessary precautions. This, however, can hardly be the case. Ricardo’s discussion of the subject of skilled labor is so indefinite that his intentions, with respect to the meaning of the words “perfect competition” in this connection, are not obvious. But, in all probability, Ricardo could not have meant that the postulate of perfect competition provides against the wages of skilled labor being in excess of those of common labor. For if he had meant this, he would not have written the section he gives us on skilled labor.[194] In this he says, in effect, that the degree in which different kinds of skilled labor enjoy higher wages does not change greatly from time to time (this itself an error), and that nothing more need be said, since he is considering only the causes of _change of “relative” values_ (this is also incorrect). We will take it for granted, then, that by his assumption of free competition Ricardo did not intend to abstract from the difficulty of skilled labor. We certainly could not approve of such a procedure if he had adopted it; for there is so little tendency for actual competition to remove the superior remuneration of skill, that this tendency should not be recognized among legitimate or effective static forces.[195] The conclusion is that Ricardo did not examine the problem of skilled labor sufficiently, and that the work of Senior, and especially of Cairnes, shows that in this problem there resides a grave difficulty for the labor theory. Neither Senior nor Cairnes took occasion specifically to point this out themselves. To discover that such is the effect of their writings becomes the task of the historian of theory. Though Cairnes refuses to give the name “cost” to entrepreneur’s expenses, at bottom his teaching means that the labor cost “philosophy” of value cannot be true, because it is in conflict with the more certain “empirical” laws of value. CHAPTER XI THE ULTIMATE RELATION OF COST TO VALUE