greater or less than farmers of other classes of lands. Nor can men who embark their capital in manufactures or trade expect profits greater or less than the profits of farmers of no-rent lands. For if they made higher profits, the no-rent farmers would go into manufactures or trade, and, if they made lower profits, the manufacturers and merchants would turn to farming. All over the country there is substantially one basic rate of wages and one basic rate of profits, with certain permanent differentials to compensate for the exceptional risk, difficulty, or disfavor attaching to particular occupations.

This conception of a basic rate of profits and wages in all occupations makes it possible for Ricardo to complete his theory of distribution by laying down the law of rent. Competition among farmers bidding for leases will force them to offer for every farm that is to let a rent per acre just equal to the value of the produce it yields over and above what an acre of the poorest land in cultivation would yield to a like outlay of capital and labor. For if a given farm were leased at a lower rent than this differential, the lucky tenant would receive more than the going rate of profits. Of course competitors would not let any farmer get so good a bargain. On the other hand, no farmer would knowingly pay a rent so high that he would have left for himself less profit than he could make on no-rent land.

These three laws of wages, profits, and rents in the present, Ricardo supplements by three other laws concerning the tendencies of wages, profits and rents to change in the future. The fundamental factors in future developments are the likelihood that population will increase and that methods of production will improve. The increase of population will require larger food supplies and force men to resort to successively poorer grades of land and more intense cultivation. We cannot expect that improvements in agricultural methods will do more than partially offset this force that is constantly making it harder to wring a living for the population from the soil. In manufactures, on the contrary, the prospect is that improved technique will more than compensate the increasing cost of raw materials. Therefore "The natural price of all commodities, excepting raw produce and labour, has a tendency to fall."

"The natural tendency of profits" is to fall; for in the last analysis profits vary inversely as "the quantity of labour requisite to provide necessaries for the labourers, on that land or with that capital which yields no rent," and this quantity increases as the decline in the original powers of the soil to which resort must be had outruns the effects of improvements in methods of agriculture.

"In the natural advance of society, the [real] wages of labour [also] have a tendency to fall, so far as they are regulated by supply and demand; for the supply of labourers will continue to increase at the same rate, whilst the demand for them will increase at a slower rate," since the decline of profits checks the accumulation of capital. Rent on the contrary tends to rise. Indeed the landlord scores a double gain; the declining margin of cultivation means larger rents in produce, and each unit of produce means larger purchasing power over manufactured goods.

Hence, despite the checks interposed repeatedly by improvements in methods of production, the time seems coming when "the very low rate of profits will have arrested all accumulation, and almost the whole produce of the country, after paying the labourers, will be the property of the owners of land and the receivers of tithes and taxes." Such are the chief conclusions of Ricardo's Political Economy. They are simple yet drastic. Wages are fixed by the standard of living and the pressure exerted by the growth of population makes it difficult to prevent that standard from sinking slowly. Profits also will shrink as more and more labor is required to provide necessaries for the mass of the working population. The future belongs to the landlords, who will grow richer while the laborers and capitalists grow poorer. "It follows," says Ricardo, "that the interest of the landlord is aways opposed to the interest of every other class in the community."

2. RICARDO'S CONCEPTION OF HUMAN NATURE AND OF SOCIAL

ORGANIZATION

How did Ricardo reach these sweeping conclusions? How did he defend them against critics? His way of working is important for us because it exercised even more influence than the conclusions to which it led.

Ricardo had been an eminently successful financier for years before he became an economic theorist. He had lived on the apex of the business pyramid, and from that lofty perch he had surveyed the surrounding realms of merchandizing, manufactures, and agriculture. Concerning the details of making and selling actual commodities he had little practical knowledge, or he could never have said that "in the production of manufactured commodities every portion of capital is employed with the same results and no portion pays a rent." But he felt that he had the essential facts in hand. When he came to write his book, he re-read Adam Smith, Say and Malthus; but he did not seek to collect new data concerning wages,

profits, or rents, or question in any way the oversimplified analysis of human nature which he found in those writers. His conclusions rest on the broad assumptions concerning economic behavior which a thoughtful financier had found dependable, and which he saw no occasion to test critically.

For his purposes capitalists are animated by a "restless desire' to find the most profitable investments, modified by a conventional eye for the non-pecuniary disadvantages of certain trades, and a not-insuperable preference for home over foreign investments. His laborers are creatures ruled by habit and a tropismatic longing to marry. His landlords are Olympians raised above economic strife, reaping their double gains in idleness and honor. "Their rent is the effect of circumstances over which they have no control, excepting indeed as they are the law makers, and lay restrictions on the importations of corn."

Similarly, the social organization under which these three classes live is simple and enduring to Ricardo. Social organization had changed in the past, for Ricardo could look back to "that early and rude state of society which precedes both the accumulation of stock and the appropriation of land." But social organization had reached maturity and would not change materially in the future. He did indeed expect that "the progressive state" in which he lived would run down like a clock into "the stationary state," that is the state in which population stops growing and capital stops accumulating. But this change implies no serious shift in social organization. In the stationary state there will be the same three classes of men dividing the fruits of industry; the same system of private property, investment for profit, and production for the market, the same dependence of the mass of mankind upon wage-labor, and the same government maintaining "security." Various minor reforms are. feasible, but the institutional framework of society will remain what it is. Men like Robert Owen who cherished hopes of an economic revolution were "visionaries."

Not that Ricardo had a high opinion of the existing social order— far from it. Besides the minor faults he strove manfully to mend, he saw fundamental faults that would abide. On his showing the existing order presents an irreconcilable conflict of interests. It is true not only that "the interest of the landlord is always opposed to that of the consumer and manufacturer," but also that "There is no way of keeping profits up but by keeping wages down." And there is nothing to be done about these class conflicts; they are as much a part of the natural order as the scarcity of fertile lands.

Furthermore: "Nothing contributes so much to the prosperity and happiness of a country as high profits"; yet the inevitable drift of prosperity is to stimulate the accumulation of capital, to reduce profits, and thus to destroy itself.

The reason why we must acquiesce in the present order despite its fundamental defects is found in "that principle which should ever be held sacred, the security of property." This principle is sacred for no mysterious reason: it has its ground in ordinary human nature. Even the laborers whose prospects are so drab would find any disturbance of the present order a catastrophe:

. . for the quantity of employment in the country must depend, not only on the quantity of capital, but upon its advantageous distribution, and, above all, on the conviction of each capitalist that he will be allowed to enjoy unmolested the fruits of his capital, his skill, and his enterprise. To take from him this conviction is at once to annihilate half the productive industry of the country, and would be more fatal to the poor laborer than to the rich capitalist himself. This is so self-evident that men very little advanced beyond the very lowest stations in the country cannot be ignorant of it.

Ricardo's type of economics, then, consisted of conclusions reached by reasoning from a few broad assumptions that over-simplified the facts. Human nature is far less simple and social organization is Т far less stable than he assumed. Improvements in production have been more sweeping, the rise in the standard of living has been more rapid than he expected, and the birth rate has declined. Consequently most of the conclusions which Ricardo drew about the future have proved to be mistaken. The landed proprietors of England have not gained in wealth faster than the capitalist classes; profits probably have not declined, real wages have not been stable, it has not become harder to wring a living from the soil, England has not approached the "stationary state," but seems to be swirling in a current of change today quite as truly as when Ricardo wrote.

Yet Ricardian economics is not to be dismissed lightly as a tissue of false conclusions spun from mistaken assumptions. It may be that in good part; but it is also the first vigorous attempt to think through the tangled problems of distribution on the basis of such knowledge of human nature and social organization, and with such analytic technique as was available when practical politics brought the capitalist class into sharp conflict with the landed interest. We learn something by dwelling on Ricardo's errors; but we can learn. more by considering what use successive generations have made of his work, and how they have improved upon it.

3. WHY RICARDO'S TYPE OF ECONOMIC THEORY REMAINED
DOMINANT SO LONG

The class which was rising to power in the two generations following Ricardo's death accepted his political economy as established truth, a safe guide to public policy.

Ricardo's arguments reinforced Adam Smith's case for free-trade and Malthus' case for checking the increase of population. The new poor law was enacted in 1834 and England completed the gradual abolition of her protective duties by repealing the corn laws in 1846. Sir Robert Peel followed Ricardo's specifications when he reorganized the Bank of England in 1844. Economists were seated in Royal Commissions and employed in the Civil Service. Chairs of political economy were founded in Oxford and Cambridge, and elementary text books were prepared for the use of school teachers and governesses. By popular lectures before Mechanics Institutes, newspaper articles and propagandist pamphlets an attempt was made to spread the truths of political economy broadcast among the working classes. Miss Martineau's tales illustrating the economic verities sold by the ten thousand. Clever writers applied economic theories to questions of the day in the quarterly reviews, and liberal parsons like Sydney Smith represented economics in the church. The English classics were promptly republished in the United States, and translated into foreign tongues for the benefit of the Continent. Nor did political economy suffer from intellectual isolation. It was part of the wider growth of Philosophic Radicalism and so had stimulating contacts with other social disciplines. Historians like Grote, Buckle, and Thorold Rogers were among its votaries; anthropologists like Hearne wrote economic treatises, psychologists from James Mill to Alexander Bain expounded the conception of human nature which the economists took for granted, John Stuart Mill and Walter Bagehot elaborated and defended the logic implicit in Ricardo, John Austin systematized jurisprudence on lines that harmonized with economics, the revolution in biology was started by Darwin's reflections upon an economic doctrine, and Herbert Spencer began his career with a book which set forth the political theory of the economists in uncompromising form. Never in fact has political economy enjoyed such popular favor and intellectual prestige, never has it exercised such practical authority as in the two generations that followed Ricardo.

One might well expect that all this popular and scientific interest, all these practical applications would cause a rapid development