On The Principles of Political Economy, and TaxationRicardo, David
General
On The Principles of Political Economy, and Taxation
Ricardo, David
Economics
I have already attempted to shew, that the market price of corn, would,
under an increased demand from the effects of a bounty, exceed its
natural price, till the requisite additional supply was obtained, and
that then it would again fall to its natural price. But the natural
price of corn is not so fixed as the natural price of commodities;
because, with any great additional demand for corn, land of a worse
quality must be taken into cultivation, on which more labour will be
required to produce a given quantity, and the natural price of corn
would be raised. By a continued bounty, therefore, on the exportation of
corn, there would be created a tendency to a permanent rise in the price
of corn, and this, as I have shewn elsewhere,[39] never fails to raise
rent. Country gentlemen then have not only a temporary but a permanent
interest in prohibitions of the importation of corn, and in bounties on
its exportation; but manufacturers have no permanent interest in a
bounty on the exportation of commodities, their interest is wholly
temporary.
A bounty on the exportation of manufactures will undoubtedly, as Dr.
Smith contends, raise the market price of manufactures, but it will not
raise their natural price. The labour of 200 men will produce double the
quantity of these goods that 100 could produce before; and
consequently, when the requisite quantity of capital was employed in
supplying the requisite quantity of manufactures, they would again fall
to their natural price. It is then only during the interval after the
rise in the market price of commodities, and before the additional
supply is obtained, that the manufacturers will enjoy high profits; for
as soon as prices had subsided, their profits would sink to the general
level.
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