This motive to exchange will supply the measure by which the exchange will be made, for the producers of any commodity will never be contented to give, for any other commodity, the produce of more of their labor than it would cost them directly to produce it, and not being contented, they could soon change the market price by diverting a portion of their own labor to the production of that other commodity, and so changing the ratio of the supplies of the two commodities and the demand for them. There might be some difficulty in this process, which would be slow, where an uneducated laborer was the sole productive agent; but it must be easy where capital concurs in production, and this power of easily commanding a fair price for his productions is one of the many advantages, which the laborer derives from the concurrence of the capitalist in production. Let us illustrate our reasoning by supposing that in the production of a commodity, A costs a of labor, and B the same, and that the supply of A is so small and of B so large that A exchanges in market for 2 B. The producer of B there gives 2 a of his labor for a of another's. He could obtain A with less toil and labor by producing it himself, than by producing 2 B to exchange for it. With a of his labor he can produce A, and still have the other a to produce B if he wishes it, or another A. Consequently the supply of B will be diminished and that of A increased, until in the market A exchanges for B. Were this course pursued, until it exchanged for less than B, as B, then the same motives would affect the producers of A, as before affected those of B, and the market price of A would again rise, until it exchanged for B. This would be the point of repose about which the market-price would oscillate, and it would conform to this average or natural price with the greater rapidity, certainty, and steadiness, as the market was freer and larger, and the society more intelligent and active.

This is so plain that it would never have been disputed, but for a confusion of ideas, which arose from the fact that capital and natural agents concur with labor in production. A very simple analysis will show that this does not alter the case. Capital, as we before said, is made up of various commodities, and their exchangeable value must be determined by the labor of production, or by the labor and capi tal so employed. But this capital was itself produced by labor and capital, and so on till we come to the last capital, which was produced by labor alone. It may be said that we

do not reach this, until we return to the origin of society, but the question is not what labor it formerly cost to produce, but what it actually now would cost. Take the example, used by Say and McCulloch, of the watch, or any other commodity; in analysing the capital necessary to produce it, we must find that capital capable of being produced, and actually produced, by labor and the powers of nature alone, either directly or indirectly. Abstract from the watch, the labor of the me chanic, and what have we but a few grains of gold, produced by labor from the mine or natural agent. It may be said that McCulloch did not consider the coin or capital which supports the mechanic, and must be advanced to him during the operation. But is not that coin, as well as the implements which aid in producing it, the production of labor and natural agents? When the hunter employs one month in making a bow and arrows, and the next month in using them, as capital, to kill deer, the deer are as much the acquisitions of labor, as if he had employed both months in killing them without the aid of his implements; the only difference is that his labor probably will be more productive in one form than the other. The concurrence of capital in production does not alter our conclusions as to price; are they changed by the concurrence of natural agents?

If such agents are unlimited in quantity, all equally con venient, and equally productive, to every new application of labor, they will never be appropriated, and will never yield rent, for no one will pay a price for the use of what nature supplies to him without cost or limit. In this case, the use of natural agents in production cannot affect exchangeable values. But let us suppose that the natural agent necessary for the production of any commodity, A, is limited in quantity, and that society wants more of A than can be produced. There is in this case a natural limit on the supply of A, and the demand may so increase as to raise and maintain its market price above the natural price, that is, to make it exchange for other commodities which it costs more labor to produce. This is what we have called a monopoly price. If there were other natural agents which produced the same article, but at a greater cost of labor, then the monopoly price could not rise higher than the natural price at which these new agents of inferior productive power could furnish the commodity. This will be shown. at greater length when we come to consider the subject of

rent.

Therefore when we say that the labor of production is the measure of exchangeable value, or rather of that average exchangeable value, about which actual exchangeable values are constantly oscillating, we do not mean only the direct labor employed, but also the labor necessary to produce the capital employed; we do not mean the labor necessary to produce the commodity on the most productive natural agent; but on the least productive class of agents, which it is necessary to use to obtain the supply required by society. Moreover we expressly except the case of a monopoly price, though it may be remarked that there are very few commodities, and those comparatively unimportant, whose production is absolutely limited in amount.

With these limitations, it may be safely assumed that the labor it costs to produce any commodity is the measure of its average exchangeable value, and that the market price. of any article is so regulated by demand and supply, as to tend to conformity with the natural price, that is, such a quantity of any other article as it cost the same labor to produce.

We must be cautious to observe that the labor of production is not itself the natural price, but the measure of the natural price, the standard by which the commodity produced is compared with any other commodity, and a natural value or ratio established between them. Much error and useless argument have arisen from overlooking this distinction.

In the statement of our subject, we observed that the productions of society were divided, as wages, profit, and rents, amongst the laborers, the capitalists, and the owners of the natural agents or powers. It follows that the absolute amount, which falls to each class, will depend on the whole amount of production, and will be large or small, as that is large or small. What this amount is, must depend not only on the present productiveness of labor, but on the manner in which it has been employed in past times, the amount it has produced, and the portion of that production it has saved and accumulated. These considerations and questions belong to that branch of the science, which treats of the production of wealth; we are now occupied only with its distribution, or the relative, not the absolute amount of wages, profits, and rents. It is the proportion they bear to each other, which we are interested in determining.

It will simplify the inquiry very much, if we suppose the natural agents to be free, which will happen when they are unlimited in quatity, and yield equal returns to every new application of labor. In such a case, there will be no rent, or at all events, the proportion it bears to the whole production must remain constant. Our attention will thus be confined to profits and wages, and we shall separately consider the modifications to which they are subject from the introduction of rent.

It would be inaccurate to regard the productions of society. as divided into two shares, one going to the laborer and the other to the capitalist. In reality, we find that the capitalist employs the laborer and advances his wages before his exertions have yielded the desired production. When this is obtained, the whole belongs to the capitalist; a part replaces the capital employed and consumed in the work of production, and the balance is his profits. It is true that the part which replaces the capital, must be the equivalent of what was advanced to the laborer as wages, but it is not identical with it, and great confusion has been occasioned by so considering it. This has induced some authors, as we shall see hereafter, to consider profits as a deduction from wages, and to regard the interests of the capitalist and laborer as antagonistical. Strange, if God had so constituted the two great classes of society that they were, of necessity, natural enemies! What is true of individual capitalists, in this instance, is true of all capitalists. Their capital employs labor; the whole production belongs to them, a part replaces the capital employed and consumed, and the balance is profits, which will be large or small, as labor is more or less productive. Let us bear in mind this essential distinction between profits and wages; profits relate only to the growth or increase of capital from period to period, while wages refer to its present distribution and division. in order to production. The whole mass of the productions of society depends on the amount of its labor, supposing the productive powers of that labor to remain constant, and will increase at the same rate, whether we suppose wages high or low, for wages could be only high or low, while the supply of labor was the same, because a smaller or larger portion of capital was hoarded. But to hoard fixed capital would be to diminish the productive powers of labor, and circulating capital consisting of food, cloths, &c. can

not be hoarded except for very short periods, nor can it be the interest of the capitalist for the moth to consume it, rather than the laborer. Accordingly, the amount of profits and their rates, or the ratio they bear to the capital employed, depend entirely on the productiveness of labor, provided we consider the whole capital and profits of society.

It is true that individual capitals may receive a higher rate of profit than the general average, or natural rate of profits. This will happen when their productions have a market price higher than the natural; in such a case, some other commodities must sell below their natural price, and their producers must receive a rate of profit lower than the natural rate. Capital will soon flow from the less to the more profitable employment, and profits will be equalized.

The same result may be caused by a fall in the wages of the labor engaged in the particular employment. These laborers, receiving wages below the general average will, by passing to other more lucrative employments, diminish the supply in the given occupation. This will tend to raise the wages of those who remain in it, and at the same time, capital will be attracted by the higher profits, and concur in raising wages.

Profits, in all the various employments of capital, tend to an equality which they attain with the greater certainty and rapidity, as society is the more intelligent and civilized; and the same is true of wages. The apparent inequalities which may be more frequently observed in wages than profits, are explained by the real or supposed advantages or disadvantages of particular employments, their dangers, difficulties, and agreeableness or disagreeableness. This subject has been treated by Dr. Smith with a felicity of manner, and force of analysis, remarkable even in him. The labor of a doctor is fairly entitled to higher wages than that of a master mechanic, who in his turn receives more than the common day laborer. The physician by saving life, often contributes more in a day to the produc tive powers of society, than the mechanic in a year. When the market wages, or the wages actually received in any employment differ from this natural proportion, labor will be soon diverted from those employments which are receiving less to those which receive more, and in this way, their equilibrium will be restored. There is, however, a certain difficulty to the laborer in changing his habits of employ