Principles of Political Economy: Abridged with Critical, Bibliographical, and Explanatory Notes, and a Sketch of the History of Political Economy — John Stuart Mill — John Shaqi
Principles of Political Economy: Abridged with Critical, Bibliographical, and Explanatory Notes, and a Sketch of the History of Political Economy
John Stuart Mill · en
We thus arrive at the conclusion of Ricardo and others, that the rate of
profits depends upon wages; rising as wages fall, and falling as wages
rise. In adopting, however, this doctrine, I must insist upon making a
most necessary alteration in its wording. Instead of saying that profits
depend on wages, let us say (what Ricardo really meant) that they depend
on the _cost of labor_.
This is an entirely different question from that concerning the
rate of wages before discussed (Book II, Chap. II). That had to do
with the amount of the capital which each laborer, on an average,
received as real wages, and this average rate was affected by the
number of competitors for labor, as compared with the existing
capital, taking into account the nature of the industries in a
country. An increase of population, bringing more laborers to
compete for employment, will lower the average amount of real
wages received by each one; and a decrease of population will
bring about the reverse. The rate of wages, however, now that we
are considering the matter from the point of view of the
capitalist, is but one of the things to be considered affecting
_cost of labor_. The former question was one as to the
distribution of capital; the latter is one as to the amount by
which the total production is greater than the total capital
advanced. Since all capital consists of advances to labor, the
present inquiry is one in regard to the quantity of advances
compared with the quantity returned; that is, the relation of the
total capital to the total production arising from the use of that
capital. In the diagram before used (p. 179) the question is not
how the contents of circle B are to be distributed, but the
relative size of circle B to circle A. In order to produce circle
A, it is necessary to advance what is represented by circle B.
Wages and the cost of labor; what labor brings in to the laborer and what
it costs to the capitalist are ideas quite distinct, and which it is of
the utmost importance to keep so. For this purpose it is essential not to
designate them, as is almost always done, by the same name. Wages, in
public discussions, both oral and printed, being looked upon from the same
point of view of the payers, much oftener than from that of the receivers,
nothing is more common than to say that wages are high or low, meaning
only that the cost of labor [to the capitalist] is high or low. The
reverse of this would be oftener the truth: the cost of labor is
frequently at its highest where wages are lowest. This may arise from two
causes. (1.) In the first place, the labor, though cheap, may be
inefficient.