_X_. You are facetious, my friend. The man must be paid, as you say; but not by the buyers of hats any more than by the buyers of shoes: for the price of hats cannot possibly rise in such a case, as I have said before. And, that I may demonstrate this, let us assume that when the labor spent on a hat cost twelve shillings, the rate of profits was fifty per cent.; it is of no consequence what rate be fixed on: assuming this rate, therefore, the price of a hat would, at that time, be eighteen shillings. Now, when the _quantity_ of labor rose from four to five days, this fifth day would add three shillings to the amount of wages; and the price of a hat would rise in consequence from eighteen shillings to a guinea. On the other hand, when the _value_ of labor rose from twelve shillings to fifteen shillings, the price of a hat would not rise by one farthing, but would still continue at eighteen shillings. _Phæd_. Again I ask, then, who is to pay the three shillings? _X_. The three shillings will be paid out of profits. _Phæd_. 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. _Phæd_. 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. _Phæd_. You are right: prove this, X., "et eris mihi magnus Apollo." _X_. Tell me, then, Phædrus, when the value of labor rises--in other words, when wages rise--what is it that causes them to rise? _Phæd_. 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: