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3. Profit. The difference between the value of the advances necessary to produce a commodity, and the value of the commodity when produced.--p. 293.
Mill. (Elements, g'c.) 3rd Ed.
1. Rent. The difference between the return made to the most productive, and that which is made to the least productive portion of capital employed on the land.
2. Wages. The price of the labourer's share of the commodity produced.-p. 41. .
3. Profit. The share of the joint produce of labour and stock which is received by the owner of stock after replacing the capital consumed. The portion of the whole annual produce which remains after deducting rent and wages. Remuneration for hoarded labour.—Chap. 2, 3.
TORRENS. (Corn Trade.) 3rd Ed.
1. Rent. That part of the produce which is given to the land-proprietor for the use of the soil.p. 130.
2. Wages. The articles of wealth which the labourer receives in exchange for his labour.—p. 83.
3. Profit. The excess of value which the finished work possesses above the value of the material, implements, and subsistence expended. The surplus remaining after the cost of production has been replaced. — Production of Wealth, p. 53.
M‘Culloch. (Principles, &c.)
1. Rent. That portion of the produce of the earth which is paid by the farmer to the landlord for the use of the natural and inherent powers of the soil.-P. 265.
2. Wages. The compensation paid to labourers in return for their services.-Essay on Rate of Wages, p. 1.
3. Profit. The excess of the commodities produced by the expenditure of a given quantity of capital, over that quantity of capital.—Principles, p. 366.
RICARDO. (Principles, fc.) 3rd Ed.
1. Rent. That portion of the produce of the earth which is paid to the landlord for the use of the original and indestructible powers of the soil.—p. 53.
2. Wages. The labourer's proportion of the produce.Chap. v.
3. Profit. The capitalist's proportion of the produce.Chap. vi.
The first observation to be made on these definitions, is, that the Rent of land, which is only a species of an extensive genus, is used as a genus, and that its cognate species are either omitted, or included under genera to which they do not properly belong. Wages and Profits are of human creation : they imply a sacrifice of ease or immediate enjoyment, and bear a ratio to that sacrifice which is indicated by the common expressions of “the rate of wages," and the "rate of profits :" a ratio which has a strong tendency to uniformity. But there is another and a very large source of revenue which is not the creation of man, but of nature; which owes its origin, not to the will of its possessor, but to accident; which implies no sacrifice, has no tendency to uniformity, and to which the term “ rate" is seldom applied. This revenue arises from the exclusive right to some instrument of production, enabling the employment of a given amount of labour or capital to be more than usually productive. The principal of these
instruments is land; but all extraordinary powers of body or mind, — all processes in manufacture which are protected by secrecy or by law, — all peculiar advantages from situation or connexion,-in short, every instrument of production which is not universally accessible, affords a revenue distinct in its origin from Wages or Profits, and of which the Rent of land is only a species. In the classification of revenues, either Rent ought to have been omitted as a genus, and considered only as an anomalous interruption of the general uniformity of wages and profits, or all the accidental sources of revenue ought to have been included in one genus, of which the Rent of land would have formed the principal species.
Another remark is, that almost all these definitions of Profit include the wages of the labour of the Capitalist. The continental Economists have in general been aware of this, and have pointed it out in their analyses of the component parts of Profit. The British Economists have seldom entered into this analysis, and the want of it has been a great cause of obscurity.
On the other hand, much of what properly belongs to Profit and Rent is generally included under Wages. Almost all Economists consider the members of the liberal professions under the class of labourers. The whole subsistence of such persons, observes Mr. M‘Culloch,* is derived from Wages; and they are as evidently labourers as if they handled the spade or the plough. But it should be considered, that those who are engaged in any occupation requiring more skill than that of a common husbandman, must have expended capital, more or less, on the acquisition of their skill; their education must have cost something in every case, from that of the handicraft
apprentice, to that of the legal or medical student; and a Profit on this outlay is of course looked for, as in other disbursements of capital; and the higher profit, in proportion to the risk; viz. the uncertainty of a man's success in his business. Part, therefore, and generally far the greater part, of what has been reckoned the wages of his labour, ought more properly to be reckoned profits on the capital expended in fitting him for that particular kind of labour. And again, all the excess of gains acquired by one possessing extraordinary talents, opportunities, or patronage (since these correspond to the possession of land, -of a patent-right —or other monopoly,—of a secret, :c.) may be more properly regarded as Rent than as Wages.
Another most fruitful source of ambiguity arises from the use of the word Wages, sometimes as expressing a quantity, sometimes as expressing a proportion.
In ordinary language, Wages means the amount of some commodity, generally of silver, given to the labourer in return for a given exertion; and they rise or fall, as that amount is increased or diminished.
In the language of Mr. Ricardo, they usually mean the labourer's proportion of what is produced, supposing that produce to be divided between him and the Capitalist. In this sense they generally rise as the whole produce is diminished; though, if the word be used in the other sense, they generally fall. If Mr. Ricardo had constantly used the word "
“ Wages,” to express a proportion, the only inconvenience would have been the necessity of always translating this expression into common language. But he is not consistent. When he says,* that " whatever raises the Wages of labour lowers the Profits of stock,"
he considers Wages as a proportion.
When he says,* high Wages encourage population;" he considers wages as an amount. Even Mr. M‘Culloch, who has clearly explained the ambiguity, has not escaped it.
He has even suffered it to affect his reasonings. In his
“ On the Rate of Wages,” † he admits that “ when Wages are high, the Capitalist has to pay a larger share of the produce of industry to his labourers.” An admission utterly inconsistent with his general use of the word, as expressing the amount of what the labourer receives, which, as he has himself observed, I may increase while his proportion diminishes.
A few only have been noticed of the ambiguities which attach to the seven terms that have been selected ; and these terms have been fixed on, not as the most ambiguous, but as the most important, in the political nomenclature.
Supply and Demand,” “ Productive and Unproductive,” “Overtrading,” and very many others, both in political economy, and in other subjects, which are often used without any more explanation, or any more suspicion of their requiring it, than the words “ triangle” or “twenty, ” are perhaps even more liable to ambiguities than those above treated of. But it is sufficient for the purpose of this Appendix to have noticed, by way of specimens, a few of the most remarkable terms in several different branches of knowledge, in order to show both the frequency of an ambiguous use of language, and the importance of clearing up such ambiguity.