Every single institution of society is brought to the test of utility and general national well-being;hence,private property in land,if it fails under this test,will not continue.So too with the rate of interest:older economists have insisted on the necessity of a certain rate,in order to encourage the accumulation of capital;but we may fairly ask whether the rate of remuneration for the use of capital is not too high-whether we could not obtain sufficient capital on easier terms?These considerations show that,in predicting the actual course of industrial progress,we must not be content to say that because there has been a movement in a certain direction in the past-for example,one from status to contract-it will therefore continue in the future.We must always apply the test,Does it fit in with the urgent present requirements of human nature?
Ricardo's influence on legislation,to which I have already alluded,was twofold;it bore directly upon the special subject of currency and finance;and,what is more remarkable,it affected legislation in general.As regards finance,his pamphlets are the real justification of our monetary system,and are still read by all who would master the principles of currency.With respect to other legislation,he and his friends have the great credit of having helped to remove not merely restrictions on trade in general,but those in particular which bore hardest on the labourer.When Joseph Hume,in 1824,proposed the repeal of the Combination Laws,he said he had been moved thereto by Ricardo.But though Ricardo advocated the removal of restrictions which injured the labourer,he deprecated all restrictions in his favour;he ridiculed the Truck Acts,and supported the opposition of the manufacturers to the Factory Acts -an opposition which,be it remembered,though prompted by mere class interest,was also supported in the name and on the then accepted principles of economic science.
In this way Ricardo became the prop,as I have called him,of the middle classes.Throughout his treatise there ran the idea of natural law,which seemed to carry with it a sort of justification of the existing constitution of society as inevitable.Hence his doctrines have proved the readiest weapons wherewith to combat legislative interference or any proposals to modify existing institutions.Hence,too,his actual conclusions,although gloomy and depressing,were accepted without question by most of his contemporaries.Another school,however,has grown up,accepting his conclusions as true under existing social conditions,but seeing through the fallacy of his 'natural law.'
These are the Socialists,through whom Ricardo has become a terror to the middle classes.The Socialists believe that,by altering the social conditions which he assumed to be unalterable,Ricardo's conclusions can be escaped.Karl Marx and Lassalle have adopted Ricardo's law of wages;but they have argued that,since by this law wages,under our present social institutions,can never be more than sufficient for the bare subsistence of the labourer,we are bound to reconsider the whole foundation of society.Marx also simply accepts Ricardo's theory of value.The value of products,said Ricardo,is determined by the quantity of the labour expended on them;and Marx uses this statement to deduce the theorem that the whole value of the produce rightly belongs to labour,and that by having to share the produce with capital the labourer is robbed.
Mr Henry George,again,the latest Socialist writer,is purely and entirely a disciple of Ricardo.The whole aim of his treatise,Progress and Poverty,is to prove that rent must rise as society advances and wealth increases.It is not the labourer,Ricardo reasoned,who will be the richer for this progress,nor the capitalist,but the owner of land.Mr George's theory of progress is the same.Putting aside his attempt to show a connection between the laws of interest and wages,which he contends will rise and fall together,there is little difference between his conclusions and Ricardo's.Others before Mr George had clearly enough seen this bearing of the law of rent.Roesler,the German economist,says:'Political Economy would only be a theory of human degradation and impoverishment,if the law of rent worked without modification.'
