FromthesedifficultiesRicardoescapesbyanothermethod。Malthus’stheoryofpopulationgiveshimwhatherequires。The’naturalpriceoflabour’asdistinguishedfromits’marketprice’is，asheasserts，’thatpricewhichisnecessarytoenablethelabourers，onewithanother，tosubsistandperpetuatetheirracewithouteitherincreaseordiminution。’19Thisisthetrue’naturalprice，’aboutwhichthe’marketprice’oscillates。Anincreaseofcapitalmayraisewagesforatimeabovethenaturalprice，butanincreaseofpopulationwillbringbackthepreviousrate。Ricardowarnsus，indeed，thatthisnaturalpriceoflabourisnottoberegardedassomething’absolutelyfixedandconstant。’20Itvariesindifferenttimesandcountries，andeveninthesamecountryatdifferenttimes。AnEnglishcottagernowpossesseswhatwouldoncehavebeenluxuries。Ricardoadmitsagain21thatthewagesofdifferentclassesoflabourersmaybedifferent，althoughhedoesnotconsiderthatthisfactaffectshisargument。Wemayallowforitbyconsideringtheskilledlaboureras2or1½；labourersrolledintoone。Theassumptionenableshimtogetoutofaviciouscircle。
Heisseekingtodiscovertheproportionsinwhichproducewillbedividedbetweenthetwoclasses，andwhichcooperateintheproduction。The’demandandsupply’principlemayshowthatanincreaseofcapitalwilltendtoincreasewages，buteventhattendency，ashecarefullypointsout，canonlybeadmittedsubjecttocertainimportantreservations。Inanycase，ifitexplainstemporaryfluctuations，itwillnotascertainthepointroundwhichthefluctuationstakeplace。Butthetwovariables，wagesandprofit，areclearlyconnected，andifwecanonceassumethatoneofthesevariablesisfixedbyanindependentlaw，wemayexplaininwhatwaytheotherwillbefixed。Havinggotridof’rent，’theremainingproducehastobedividedbetweenwagesandprofit。Iftheproducebefixed，thegreatertheshareofthelabourerthelesswillbetheshareofthecapitalist，andviceversa。Butthelabourer’sshareagainisdeterminedbytheconsiderationthatitmustbesuchastoenablehimtokeepupthepopulation。Thecapitalistwillgetthesurplusproduceafterallowingtothelabourerthesharesodetermined。Everythingturnsultimatelyuponthis’naturalprice’——theconstantwhichunderliesallthevariations。
Oneotherpointisimplied。
Thepopulationislimited，aswesee，bythenecessityofraisingsuppliesoffoodfrominferiorsoils。Moreover，thisisthesolelimit。Adifferentviewhadbeentakenwhichgreatlyexercisedtheorthodoxeconomists。Itwasgenerallyadmittedthatintheprogressofsocietytherateofprofitdeclined。AdamSmithexplainedthisbyarguingthat，ascapitalincreased，thecompetitionofcapitalistsloweredtherate。TothisitwasrepliedasbyWestthatthoughcompetitionequalisedprofits，itcouldnotfixtherateofprofit。Thesimpleincreaseofcapitaldoesnotprovethatitwillbelessprofitablyemployed。Theeconomistshadconstantlytoargueagainsttheterriblepossibilityofageneral’glut。’Theconditionofthingsatthepeacehadsuggestedthisalarm。Themischiefwasascribedto’over-production’andnottomisdirectedproduction。Thebestcureforourevils，assomepeoplethought，wouldbetoburnallthegoodsinstock。
Onthisversionoftheargument，itwouldseemthatanincreaseofwealthmightbeequivalenttoanincreaseofpoverty。Toconfutethedoctrineinthisform，itwasonlynecessarytohaveamoreintelligentconceptionofthetruenatureofexchange。AsJamesMillhadarguedinhispamphletagainstSpence，everyincreaseofsupplyisalsoanincreaseofdemand。