If we are asked whether this doctrine of rent and the consequences which Ricardo deduced from it,are true,we mustanswer that they are hypothetically true in the most advanced industrial communities,and there only (though they have beenrashly applied to the cases of India and Ireland),but that even in those communities neither safe inference nor sound actioncan be built upon them.As we shall see hereafter,the value of most of the theorems of the classical economics is a gooddeal attenuated by the habitual assumptions that we are dealing with "economic men,"actuated by one principle only;thatcustom,as against competition,has no existence;that there is no such thing as combination;that there is equality of contractbetween the parties to each transaction,and that there is a definite universal rate of profit and wages in a community;thislast postulate implying (1)that the capital embarked in any undertaking will pass at once to another in which larger profitsare for the time to be made;(2)that a labourer,whatever his local ties of feeling,family,habit,or other engagements,willtransfer himself immediately to any place where,or employment in which,for the time,larger wages are to be earned thanthose he had previously obtained;(45)and (3)that both capitalists and labourers have a perfect knowledge of the conditionand prospects of industry throughout the country,both in their own and other occupations.But in Ricardo's speculations onrent and its consequences there is still more of abstraction.The influence of emigration,which has assumed vast dimensionssince his time,is left out of account,and the amount of land at the disposal of a community is supposed limited to its ownterritory ,whilst contemporary Europe is in fact largely fed by the western States of America.We did not adequatelyappreciate the degree in which the augmented productiveness of labour,whether from increased intelligence,improvedorganization,introduction of machinery,or more rapid and cheaper communication,steadily keeps down the cost ofproduction.To these influences must be added those of legal reforms in tenure,and fairer conditions in contracts,whichoperate in the same direction.As a result of all these causes,the pressure anticipated by Ricardo is not felt,and the cry is ofthe landlords over falling rents.not of the consumer over rising prices.The entire conditions are in fact so altered thatProfessor Nicholson,no enemy to the "orthodox",economics,when recently conducting an inquiry into the present state ofthe agricultural question,(46)pronounced the so-called Ricardian theory of rent "too abstract to be of practical utility."A particular economic subject on which Ricardo has thrown a useful light is the nature of the advantages derived fromforeign commerce,and the conditions under which such commerce can go on.Whilst preceding writers had representedthose benefits as consisting in affording a vent for surplus produce,or enabling a portion of the national capital to replaceitself with a profit,he pointed out that they consist "simply and solely in this,that it enables each nation to obtain,with agiven amount of labour and capital,a greater quantity of all commodities taken together."This is no doubt the point of viewat which we should habitually place ourselves ;though the other forms of expression employed by his predecessors,including Adam Smith,are sometimes useful as representing real considerations affecting national production,and need notbe absolutely disused.
Ricardo proceeds to show that what determines the purchase of any commodity from a foreign country is not thecircumstance that it can be produced there with less labour and capital than at home.If we have a greater positive advantagein the production of some other article than in that of the commodity in question,even though we have an advantage inproducing the latter,it may be our interest to devote ourselves to the production of that in which we have the greatestadvantage,and to import that in producing which we should have a less,though a real,advantage.It is,in short,notabsolute cost of production,but comparative cost,which determines the interchange.This remark is just and interesting,though an undue importance seems to be attributed to it by J.S.Will and Cairnes,the latter of whom magniloquentlydescribes it as "sounding the depths"of the problem of international dealings,--though,as we shall see hereafter,hemodifies it by the introduction of certain considerations respecting the conditions of domestic production.
